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Susan Burns operates a factory that manufactures corn starch, corn flakes and popcorns. One of the major raw materials used is corn, which she buys
Susan Burns operates a factory that manufactures corn starch, corn flakes and popcorns. One of the major raw materials used is corn, which she buys for $10 per kilogram. The factory operates 340 days each year. The following information has been provided:
Annual usage of corn 100,000 kilograms
Average time between placing
and receiving orders 4 days
Estimated cost of ordering and
receiving inventory (per order) $7
Estimated annual cost of carrying
a kilogram of corn in stock. $0.70
In the above case calculate:
- What is the Economic order quantity (EOQ).
- What should be the number of orders per year.
- What are the different types of inventory management system Susan can adopt. Discuss the advantages and disadvantages of different inventory management system. Write in your own words?
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