Explain the facts on which economic order quantity is depend, Operation Management

Assignment Help:

Explain the facts on which Economic Order Quantity is depend

Economic Order Quantity depends on two costs:

 (i) Inventory procurement costs which consists of expenditure connected with

* Obtaining quotations

* Processing Purchase Requisitions

* Expediting and Following up Purchase order

* Receiving materials and after that inspecting them Processing Invoices Procurement costs of seller reduce as the order quantity raises.

  (ii) Carrying Costs that vary with quantity ordered contains 

* Interest on capital investment

* Cost of storage services

 * Cost including deterioration and obsolescence

* Cost of insurance and property tax etc.

 Carrying costs are approximately directly proportional to the order size or lot size quantity.


Related Discussions:- Explain the facts on which economic order quantity is depend

Explain the service organization worry about world class, Why should a serv...

Why should a service organization worry about being world class if it does not compete outside its own national border? What impact does the Internet have on this?

Explain statistical cost estimation technique, The technique that estimates...

The technique that estimates long-run costs and the minimum efficient scale by determining the scale of operation at which most firms in an industry are concentrated is called the-

Net profit margin, Net profit margin: 1. Transportation firm now ...

Net profit margin: 1. Transportation firm now spends 60 percent of the sales revenue it receives in the supply chain, and has a net profit margin of 6 percent. The compan

How much hours of production time would you schedule for x, Plans are being...

Plans are being made to produce a product that requires 40 minutes on Resource X and 30 minutes on resource Y. Assume that there is only one of each of these resources, and that ma

Economic order quantity, The Warehouse Company supplies spare parts for its...

The Warehouse Company supplies spare parts for its two plants, Plant A and PlantB. Plant A and Plant B do not have any significant storage space. Hence you want carryminimum possib

Explain the current yield on alaska power company bonds, Alaska Power Compa...

Alaska Power Company issued $1,000 bonds that have an annual coupon rate of 7.5%. The present market value of the bonds is $1,125. If the bonds have 15 years remaining until maturi

Explain what are the four steps in the basic approach, What are the four st...

What are the four steps in the basic approach to process design that some companies use

Improve efficiency in service organisations, Lean" thinking was first devel...

Lean" thinking was first developed with manufacturing organisations in mind. Explain FIVE examples of ways in which these waste elimination principles may be applied to improve eff

Describe why variable pay-for-performance plans, Discuss why variable pay-f...

Discuss why variable pay-for-performance plans have become popular and what elements are needed to make them successful.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd