Question
Please Help me !!!! BundabergGlass Company is a distributorof carwindscreens. The windscreens are manufactured in Japan and shippedtoBundaberg. The management is expecting an annual demandof30
Please Help me !!!!
BundabergGlass Company is a distributorof carwindscreens. The windscreens are manufactured in Japan and shippedtoBundaberg. The management is expecting an annual demandof30 000 windscreens. The purchase priceofeach windscreen is $500. Currently, company orders 250 windscreensperorder. Accordingto themanagement,ittakestwo(2) weekstoreceive a new order, andthecompany works a 6-dayweekfor 50 weeks each year. Other costs associatedwithordering and maintaining an inventoryof these windscreensare given below:
The cost incurred in the purchase order departmentforplacing and processing 60 orders for the lastyearwas $30 000 (including fixed costsof$6 000). Variable ordering costs tendtoincrease by 20% annually.
- Insurance cost on inventory is 10%ofpurchase priceof perwindscreen.
- Damage and shortage cost is $15perwindscreen.
- Other inventoryholdingcost is $10perwindscreen.
Required:
(i)Determinethe optimal order quantity for car windscreensusing theeconomic order
quantity (EOQ) model. Showyourcalculations. (Round the answerto thenearest whole number)
(II)Compute reorder point and safety stockifdemand each day may vary fromtheaverage by upto20%.
(III)Calculatethetotal annual inventory costof windscreenat the economic order quantity. Showthetotal costofcarrying and ordering separately.
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