F15.37 Economic order quantity; effects of IT purchasing: wholesaler Bundabery Glass Company is a dibenbutor of car windscreens. The windboneens are manufactured in Japan and Shipped to Bundberg. Management is expecting an annual demand of 10 800 windscreens The purchase price of each windscreen is $:400- Other costs associated with ordering and maintain an inventory of these windscreens are shown below The costs incurred in the purchasing department for placing and processing orders for the past 3 years are shown No. of cream precumond 17 Management Expects these processing costs to increase by 1016 per order over the were: race " perience in the last 3Years Each order is inspected by Australian customs officers. A fee of $47 is charged A clerk in the receiving department recentes, inspects and secures the windscreens as they arive from the manufactures This activity requires 4 hours per order received. This clark has no other soonabilities and is paid at therate of $24 per hour- Relatedvariable overhead costs in this department are applied at the rate of $6 per hour. Additional warehouse space will have to be rented to store the newwindscreens Space can be rented is needed in awarehouse at an estimated cost of $2 300 per year plus $ 0-28 per windsorsen Breakage cost is estimated to merape $4 per windsorsen. Insurance on the inventory costs $1-25 per windscreen. Other carrying coats amount to $8-30 per windscreen. ndaburg Glass Company works a 6-day week for 10 weeks each veas The firm is closed for _ weeds each year. d working days are required from the time the order is placed with the supplier until it is recened 1- Assuming that all costs other than order costs remain the same, calculate the following amounts for the Bundabery Glass Company foryear 4: The amount of the ordering cost that should be used in the BOO formula (Hint: Use the high-low method to estimate the incremental processing cost per order.) Amount of the carrying coat that should be used in the 80Q formula Economic order quantity Minimum annual relevant cost of ordering and carrying at the economic order quantity Reorder point in units 2- Management: has been able to negotiate all purchasing agreement with the Japanese manufacturer, and the inspection fee has been menegotiated with the customs officials. The purchasing manager has determined that IT purchasing would enable the company to reduce the ordering cost to $ 30-30 per order. Moreover, She has anaheed the cost of storing windscreens, taking care to include the cost of wasted space and inefficiency She estimates that the real annual cost of carrying inventory is $60 per windscreen. Calculate the nov 80Q, given the purchasing manager's new cost estimates- How many orders would now be placed peryear? Calculate the new minimum annual relevant cost of ordering and carrying imentory
