12.Economic Order Quantity, timing of orders and safety stock are three important considerations in inventory management. Required:...
Question:
12.Economic Order Quantity, timing of orders and safety stock are three important considerations in inventory management. Required: A. Explain each of these considerations. B. How is EOQ affected by the timing of orders and safety stock?
13.Shields carries a part that is popular in the manufacture of automatic sprayers. Demand for this part is 4,000 units per year; order costs amount to $30 per order, and holding costs total $1.50 per unit. The company is considering the implementation of an economic order quantity model in an effort to better manage its inventories. Required: A. Compute the economic order quantity. B. Compute total annual inventory costs if Shields follows the EOQ policy.
14.Shields carries a part that is popular in the manufacture of automatic sprayers. Demand for this part is 4,000 units per year; order costs amount to $30 per order, and holding costs total $1.50 per unit. The company, which currently places four orders per year with its suppliers, is considering the implementation of an economic order quantity (EOQ) model to better manage its inventories. Preliminary EOQ calculations revealed an optimal order quantity of 400 units and total annual inventory costs of $600. Required: A. In comparison with its current policy, how much will Shields save by adopting the EOQ model? B. Briefly explain the philosophical difference between the EOQ model and the just-in-time model. Which of the two models will likely result in lower holding costs for the firm? Why?
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr