Compute total annual cost for valves

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Reference no: EM131926772

Question: Neha Shah is the purchasing agent for a firm that sells industrial valves and fluid control devices. One of the most popular valves is the KA1, which has an annual demand of 6,000 units. The cost of each valve is $120, and the inventory carrying cost is estimated to be 8% of the cost of each valve. Neha has made a study of the costs involved in placing an order for any of the valves that the firm stocks, and she has concluded that the average ordering cost is $45 per order. Furthermore, it takes about two weeks for an order to arrive from the supplier, and during this time the demand per week for KA1 valves is approximately 120. Compute the EOQ, ROP, optimal number of orders per year, and total annual cost for KA1 valves.

Reference no: EM131926772

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