Joe Henry\'s machine shop uses 2, 550 brackets during the course of a year. Thes
ID: 469171 • Letter: J
Question
Joe Henry's machine shop uses 2, 550 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets: What is the EOQ? 239.53 units (round your response to two decimal places). What is the average inventory if the EOQ is used? 119.77 units (round your response to two decimal pieces). What would be the annual inventory holding cost? $ 191.62 (round your response to two decimal places). Given the EOQ. how many orders will be made annually? 10.65 orders (round your response to two decimal pieces). What would be the annual order cost? S 191.63 (round your response to two decimal pieces). Given the EOQ, what is the total annual cost of managing (ordering and holding) the inventory? $ 383.25 (round your response to two decimal pieces). What is the time between orders? 23.47 days (round your response to two decimal places). What is the reorder point (ROP)? units (round your response to five decimal places).Explanation / Answer
Annual Demand 2550 Ordering Cost $ 18.00 Holding Cost $ 1.60 a. EOQ = 2AO / H where A = Annual Demand O = Ordering Cost per order H = Holding Cost per unit per annum a. EOQ = 2AO / H = (2 * 2550 * 18) / 1.60 = 239.53 units b. Average Inventory = EOQ/2 = 239.53/2 units = 119.77 Total Holding Cost (Average Inventory * Holding Cost per unit = 119.77 * $1.60) (A) $191.62 c. # Orders Annually = Annual Demand/EOQ = 2550/239.53 = 10.65 Total Ordering Cost (No of orders * Ordering Cost = 10.65 * $18) (B) $191.63 d. Total Annual Cost of Managing this item (A+B) $383.25 e. Time between orders = 250 days/No of Orders = 23.48 f.Reorder Point = Lead Time Demand + Safety Stock Lead Time Demand ( Lead Time * Avg Demand = 2 days * 2550 units/250 days) = 2 * 10.2 = 20.40 units
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