Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(a). A local factory uses spare parts for machine maintenances. Spare parts must always be in the store when needed so as not to affect

image text in transcribed

(a). A local factory uses spare parts for machine maintenances. Spare parts must always be in the store when needed so as not to affect the production process. The data collected from past years shows that the use of spare parts is 12,000 units per year and this rate did not change much from year to year. Spare parts are sourced from outside the country and any order will be executed at once. The cost of making an order is estimated at $400. Damage and maintenance costs per unit of spare parts in the store for a year is estimated at $5 (this cost is directly proportional to the spare parts that are in the store). The unit price of spare parts is constant. Determine (i). the total annual inventory cost if the plant operates the store on a a regular basis order of 1000 units at the beginning of each month. (ii). the optimal inventory policy

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

An Auditors Guide To Auditing Financial Statements In The UK

Authors: Steve Collings

1st Edition

1526527480, 978-1526527486

More Books

Students also viewed these Accounting questions

Question

Develop a program for effectively managing diversity. page 303

Answered: 1 week ago

Question

List the common methods used in selecting human resources. page 239

Answered: 1 week ago