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I need help on getting the total cost for this question please! Thank you so much! Creative Equipment, based in Waterloo, Ontario, manufactures virtual reality
I need help on getting the total cost for this question please! Thank you so much!
Creative Equipment, based in Waterloo, Ontario, manufactures virtual reality goggles and purchases one of the components used in the goggles from a supplier in Burnaby. B.C. The company uses 5.000 of these components per year at a cost of $80 each. The components are used evenly in the production process throughout a 360-day production year. The company estimates that it costs $10 to place a single purchase order and about $40 to carry each component in inventory for a year. Delivery from the supplier generally takes two days, but it can take as many as six days. The days of delivery time and the percentage of their occurrence are shown in the following tabulation: Delivery Time Percentage of (Days) Occurrence 2 75 3 4 5 6 10 5 5 5 100 Required: 1. Compute the EOQ. EOQ 50 components 2. Assume that the company is willing to assume a 10% risk of being out of stock. What is the safety stock? The reorder point? Safety stock Reorder point 28 components 56 components 3. Assume that the company is willing to assume only a 5% risk of being out of stock. What is the safety stock? The reorder point? Safety stock Reorder point 42 components 70 components 4. Assume a 5% stock-out risk as stated in (3) above. What is the total cost of ordering and carrying inventory for one year? Total cost Carrying cost of inventory $ 1,000Step by Step Solution
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