Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You make signs and need to buy LED lighting for your signs. You expect to use 2 5 0 , 0 0 0 strands of

You make signs and need to buy LED lighting for your signs. You expect to use 250,000 strands of LED lights this year based on past usage. When you place a purchase order, administrative costs to manage that order are $200. LED light strands cost $20 each and your inventory holding rate is 20%. Lead time is 3 days and there are 360 days/year.
Economic order quantity is $5000
ROP is $2083
Annual Purchase cost is $5000000
Annual Holding cost is $10000
Annual order cost is $10000
Total Annual inventory cost $5020000
What would happen to the TAIC if your LED supplier now imposes a minimum order quantity of 25,000? Round Answers to the nearest whole number.
Inventory holding costs will ____(increase/decrease) to $_____
Order costs will _____(increase/ decrease) to $_____
So, TAIC will ____(increase/decrease) by $______

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Risk Management In Port Operations Logistics And Supply Chain Security

Authors: Logistics And Supply Chain Security

1st Edition

1843116553, 9781843116554

More Books

Students also viewed these General Management questions