You are managing the inventory for the national distribution of a medical device for MedCo. The device
Fantastic news! We've Found the answer you've been seeking!
Question:
You are managing the inventory for the national distribution of a medical device for MedCo. The device sells for $ each. Your cost is $ per unit and the demand is exceptionally stable no variability at per month. Placing an order is time consuming and costly at $ per order mainly due to the expedited transportation costs. The minimum order quantity is units and you need to order in increments of Your company has a very high holding cost of per year.
Noticing the stable demand, you decide that you could set up an EOQ inventory policy. What is the optimal order quantity?
You just received information from your Marketing Team that backorders are actually acceptable for this product. The customer will still order the device and is willing to wait for delivery. However, the Marketing Team has calculated that the cost of this planned backorder in terms of pain to the customer is $ per unit short per year. What is your new optimal order quantity if you now allow planned back orders?
How many units need to be backordered for you to place a new order? Use order quantity solution from the previous question
Using the order quantity from Part how many orders per year do you expect to be placed?
What is the expected annual purchasing cost? in thousands of dollars
What is the expected annual ordering cost? in thousands of dollars
What is the expected annual holding cost? in thousands of dollars
What is the expected annual shortage cost? in thousands of dollars
What is the total relevant cost TRCin thousands of dollars
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: