Compute the economic order quantity of inventory

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Reference no: EM131967016

As the Procurement Manager for JOJO Incorporated, you have gathered the following information to help you in planning for procurement of inventory for the company for year 2019:

• Total projected need for the year 2019 25,000 units

• Ordering cost per order $ 500.00

• Carrying cost per unit per year $ 1.00

• Lead time in working days 10

• Number of projected working days 250

Requirements:

1. Discuss the nature, elements and importance of working capital and working capital management to an organization.

2. Compute the Economic Order Quantity of inventory for the company for 2019.

3. Compute the expected total ordering cost of inventory for the company for the year 2019.

4. Compute the expected total carrying cost of inventory for the company for the year 2019.

5. Compute the reorder point in units (given a safety stock of 500 units).

6. Identify and discuss the four major elements or categories of the “cost of quality” for an organization.

Reference no: EM131967016

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