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|_| Flber Technology. Inc.. manufactures glass bers used in the communications industry. The company's materials and parts manager is currently revising the inyentory policy for
|_| Flber Technology. Inc.. manufactures glass bers used in the communications industry. The company's materials and parts manager is currently revising the inyentory policy for 3133. one of the chemicals used in the production process. The chemical is purchased in l-pound canisters for $103 each. The rm uses 12m] canisters per year. The controller estimates that it costs $153 to place and receive a typical order of ELL-2E]. The annual cost of storing ILEEI is $5.33 per canister. Required: 2. Use the EDQ formula to determine the optimal order quantity. 3. IWhat is the tolal annual cost of ordering and storing ILL3i] at the economic order quantity? 4. How many orders will be placed per year? 5. Fiber Technology's controller. Jay Tumbull. recently attended a seminar on le purchasing. Afterward he analyzed the cost of storing ELL-2t]. including the costs ofwasted space and inefciency. He was shocked when he concluded that the real annual holding cost was $33.20 per canister. Tumbull then met with Doug Kaplan. Fiber Technology's purchasing manager. Together they contacted Reno Industries. the supplier of 31-21]. about a le purchasing arrangement. After some discussion and negotiation. Kaplan concluded that the cost of placing an order for xL-E could be reduced to just $33. Using these new cost estimates. Turnbull computed the new EDD for ILL3x0. a. Use the equation approach to compute the new EDQ. b. How many orders will be placed per year? Use the EDD formula to determine the optimal order quantity. l[Hound your answer to nearest whole number.}
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