Consider the following information about an end product item: Ordering cost = $90/order Annual demand = 936

Question:

Consider the following information about an end product item:
Ordering cost = $90/order
Annual demand = 936
Inventory carrying cost = $2/unit/week. (Notice the unit change)

a. How many orders should we place per year (52 weeks) to replenish inventory of the item based on average weekly demand?
b. Given the following time-phased net requirements from an MRP record for this item, determine the sequence of planned orders using economic order quantity and periodic order quantity procedures. Assume lead time equals zero and current on-hand inventory equals zero. Calculate the inventory carrying cost on the basis of weekly ending inventory values. Which procedure produces the lowest total cost for the eight-week period?

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Economic Order Quantity
Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. This production-scheduling model was developed in 1913 by Ford W. Harris and has...