Wilson, Inc., is a wholesaler of Protoxid for industrial clients. Demand for Protoxid is stable at 350,000 units per year. Wilson orders the product from its supplier four times a year. An order is placed when the total Protoxid on hand amounts to 25,000 units. This represents a nine-day working supply plus safety stock. The company works 300 days per year. Recently, Wilson management has expressed concern over the costs of carrying inventory and is seeking to evaluate the present inventory order and safety stock policies.

As a part of the study, the following costs were identified with respect to Protoxid:

Invoice price$ 32.92

Weight per unit1.5 Kg

Shipping charges$1.05 + $640 per truck + $0.40 per Kg

Tax on each unit $1.80

Special packaging per unit$3.65 ($1 is refunded on return of the shipping container)

Insurance on shipment $1.76 per unit, $415 per shipment

Processing order documents $183

Unloading operations$0.82 per unit + $1,800 per week.

Inspect for annual inventory$2.63 per unit

Estimated obsolescence costs$1.35 per unit

Inventory record maintenance$0.92 per unit + $2,200 per week

Inventory tax 3% of invoice price

Inventory insurance 15% of invoice price + $4,100 per month.

The company estimates its cost of capital is 22%. In addition, it conducted a study on the costs of a stockout. The average stockout costs $5,400 due to the need to request special shipments from alternative suppliers. With various safety stock levels, the probabilities of a stockout decrease as follows:

Safety stockProbability of stockout

1 50%

7,000 10%

14,0002%

21,0001%

To determine order quantity, assume a stockout probability per order of 2%. Order sizes are restricted to round lots of 5,000 units. The company has the capacity to store 90,000 units.

REQUIRED

a. What are the annual costs under the present order and safety stock system?

b. What is the EOQ?

c. What are the annual costs under the optimal order and safety stock system?

d. What is the reorder point under the optimal order and safety stock system?

... StayHome 8:07 PM 56% Done Assignment - Inventory Equation.... Wilson, Inc., is a wholesaler of Protoxid for industrial clients. Demand for Protoxid is stable at 350,000 units per year. Wilson orders the product from its supplier four times a year. An order is placed when the total Protoxid on hand amounts to 25,000 units. This represents a nine-day working supply plus safety stock. The company works 300 days per year. Recently, Wilson management has expressed concern over the costs of carrying inventory and is seeking to evaluate the present inventory order and safety stock policies. As a part of the study, the following costs were identified with respect to Protoxid: Invoice price $32.92 Weight per unit 1.5 Kg Shipping charges $1.05 + $640 per truck + $0.40 per kg Tax on each unit S1.80 Special packaging per unit $3.65 ($1 is refunded on return of the shipping container) Insurance on shipment S1.76 per unit, $415 per shipment Processing order documents $183 Unloading operations $0.82 per unit + $1,800 per week. Inspect for annual inventory $2.63 per unit Estimated obsolescence costs $1.35 per unit Inventory record maintenance $0.92 per unit + $2,200 per week Inventory tax 3% of invoice price Inventory insurance 15% of invoice price + $4,100 per month The company estimates its cost of capital is 22%. In addition, it conducted a study on the costs of a stockout. The average stockout costs $5,400 due to the need to request special shipments from alternative suppliers. With various safety stock levels, the probabilities of a stockout decrease as follows: Safety stock Probability of stockout 1 50% 7,000 10% 14,000 2% 21,000 To determine order quantity, assume a stockout probability per order of 2%. Order sizes are restricted to round lots of 5,000 units. The comnany has the capacity to store 90.000 units 10% ... StayHome 8:07 PM 56% Done Assignment - Inventory Equation.... return of the shipping container) Insurance on shipment $1.76 per unit, $415 per shipment Processing order documents $183 Unloading operations S0.82 per unit +$1,800 per week. Inspect for annual inventory $2.63 per unit Estimated obsolescence costs $1.35 per unit Inventory record maintenance $0.92 per unit + $2,200 per week Inventory tax 3% of invoice price Inventory insurance 15% of invoice price + $4,100 per month 1% The company estimates its cost of capital is 22%. In addition, it conducted a study on the costs of a stockout. The average stockout costs $5,400 due to the need to request special shipments from alternative suppliers. With various safety stock levels, the probabilities of a stockout decrease as follows: Safety stock Probability of stockout 1 50% 7,000 10% 14,000 2% 21,000 To determine order quantity, assume a stockout probability per order of 2%. Order sizes are restricted to round lots of 5,000 units. The company has the capacity to store 90,000 units. REQUIRED a. What are the annual costs under the present order and safety stock system? b. What is the EOQ? c. What are the annual costs under the optimal order and safety stock system? d. What is the reorder point under the optimal order and safety stock system? ... StayHome 8:07 PM 56% Done Assignment - Inventory Equation.... Wilson, Inc., is a wholesaler of Protoxid for industrial clients. Demand for Protoxid is stable at 350,000 units per year. Wilson orders the product from its supplier four times a year. An order is placed when the total Protoxid on hand amounts to 25,000 units. This represents a nine-day working supply plus safety stock. The company works 300 days per year. Recently, Wilson management has expressed concern over the costs of carrying inventory and is seeking to evaluate the present inventory order and safety stock policies. As a part of the study, the following costs were identified with respect to Protoxid: Invoice price $32.92 Weight per unit 1.5 Kg Shipping charges $1.05 + $640 per truck + $0.40 per kg Tax on each unit S1.80 Special packaging per unit $3.65 ($1 is refunded on return of the shipping container) Insurance on shipment S1.76 per unit, $415 per shipment Processing order documents $183 Unloading operations $0.82 per unit + $1,800 per week. Inspect for annual inventory $2.63 per unit Estimated obsolescence costs $1.35 per unit Inventory record maintenance $0.92 per unit + $2,200 per week Inventory tax 3% of invoice price Inventory insurance 15% of invoice price + $4,100 per month The company estimates its cost of capital is 22%. In addition, it conducted a study on the costs of a stockout. The average stockout costs $5,400 due to the need to request special shipments from alternative suppliers. With various safety stock levels, the probabilities of a stockout decrease as follows: Safety stock Probability of stockout 1 50% 7,000 10% 14,000 2% 21,000 To determine order quantity, assume a stockout probability per order of 2%. Order sizes are restricted to round lots of 5,000 units. The comnany has the capacity to store 90.000 units 10% ... StayHome 8:07 PM 56% Done Assignment - Inventory Equation.... return of the shipping container) Insurance on shipment $1.76 per unit, $415 per shipment Processing order documents $183 Unloading operations S0.82 per unit +$1,800 per week. Inspect for annual inventory $2.63 per unit Estimated obsolescence costs $1.35 per unit Inventory record maintenance $0.92 per unit + $2,200 per week Inventory tax 3% of invoice price Inventory insurance 15% of invoice price + $4,100 per month 1% The company estimates its cost of capital is 22%. In addition, it conducted a study on the costs of a stockout. The average stockout costs $5,400 due to the need to request special shipments from alternative suppliers. With various safety stock levels, the probabilities of a stockout decrease as follows: Safety stock Probability of stockout 1 50% 7,000 10% 14,000 2% 21,000 To determine order quantity, assume a stockout probability per order of 2%. Order sizes are restricted to round lots of 5,000 units. The company has the capacity to store 90,000 units. REQUIRED a. What are the annual costs under the present order and safety stock system? b. What is the EOQ? c. What are the annual costs under the optimal order and safety stock system? d. What is the reorder point under the optimal order and safety stock system