CarCity is a big retailer for car parts and accessories. The store stocks different types and sizes of car tire. One of the best selling tires is the Tiger Model R125, which is currently purchased from a factory in Indonesia. An analysis of the purchasing operation shows that approximately 2 labor hours are required to process a purchase order, regardless of the quantity purchased. Salaries in the purchasing Department average OMR 15 per hour. including employee benefits. In addition, a detailed analysis of 20 previous purchase orders showed that OMR XXX was spent on telephone, paper, and other consumables directly related to the ordering process isee guidelines above to obtain value of XXX). Shipping cost from Indonesia is OMR 250 for a container. A container has a capacity of 800 tires. Finally, CarCity's financial analysts established a holding cost of 30% for this type of tire The annual demand for the RI2S tire is constant at a rate of $400 units. The store purchases the tires from the Indonesian factory at a cost of 12 OMR per unit. The current practice at CarCity is to place one re-stock order cach month Part A 1. What is the ordering cost? 2. What is the current annual total inventory cost under the company's current policy? 3. Determine the optimal order quantity 4. How much safety stock is recommended for the company to carry? Justify your answer 5. What reorder point should be used? 6. State the optimal inventory policy 7. What is the total annual inventory cost under the optimal inventory policy, and how much savings does the Company achieve by implementing the optimal policy? 8. The store management has decided to allow back orders. What would be the optimal inventory policy i back ondering is acceptable, and how much would CarCity save in total cost? 9. CarCity is considering moving their business to a different supplier in Indonesia. This new supplier offers the following pricing schedule for the tires Quantity Price per unit (OMR) 0.100 1225 101 - 200 12.00 201 - 500 11.75 11.50 More than 501 Should CarCity switch to the new supplier? Justify your answer CarCity is a big retailer for car parts and accessories. The store stocks different types and sizes of car tire. One of the best selling tires is the Tiger Model R125, which is currently purchased from a factory in Indonesia. An analysis of the purchasing operation shows that approximately 2 labor hours are required to process a purchase order, regardless of the quantity purchased. Salaries in the purchasing Department average OMR 15 per hour. including employee benefits. In addition, a detailed analysis of 20 previous purchase orders showed that OMR XXX was spent on telephone, paper, and other consumables directly related to the ordering process isee guidelines above to obtain value of XXX). Shipping cost from Indonesia is OMR 250 for a container. A container has a capacity of 800 tires. Finally, CarCity's financial analysts established a holding cost of 30% for this type of tire The annual demand for the RI2S tire is constant at a rate of $400 units. The store purchases the tires from the Indonesian factory at a cost of 12 OMR per unit. The current practice at CarCity is to place one re-stock order cach month Part A 1. What is the ordering cost? 2. What is the current annual total inventory cost under the company's current policy? 3. Determine the optimal order quantity 4. How much safety stock is recommended for the company to carry? Justify your answer 5. What reorder point should be used? 6. State the optimal inventory policy 7. What is the total annual inventory cost under the optimal inventory policy, and how much savings does the Company achieve by implementing the optimal policy? 8. The store management has decided to allow back orders. What would be the optimal inventory policy i back ondering is acceptable, and how much would CarCity save in total cost? 9. CarCity is considering moving their business to a different supplier in Indonesia. This new supplier offers the following pricing schedule for the tires Quantity Price per unit (OMR) 0.100 1225 101 - 200 12.00 201 - 500 11.75 11.50 More than 501 Should CarCity switch to the new supplier? Justify your
