Question
The following production information for the Murray Manufacturing Company has been gathered for part number AB7 (which is used in the manufacture of one of
The following production information for the Murray Manufacturing Company has been gathered for part number AB7 (which is used in the manufacture of one of its products):
Murray Manufacturing buys part AB7 from a supplier.
Murray estimates that it will need 5,400 parts this month (which has 30 days).
Each part costs $6.89, and it costs Murray $750 to place an order for part AB7.
It takes 8 days to receive an order of part AB7 from Murray's supplier.
All parts orders are received, inspected, and checked into inventory the same day shipment is received.
Inventory carrying costs are 20% of the inventory value for the month.
Required:
A. Compute the economic order quantity in units (rounded to the nearest unit) for part AB7.
B. Compute the reorder point (rounded to the nearest unit) for part number AB7
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