4. Harun's shop buys cement in 50pound bags. The shop purchases an average of 6075 bags...
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4. Harun's shop buys cement in 50pound bags. The shop purchases an average of 6075 bags a year. Preparing an order and receiving a shipment of cement involves a cost of $4 per order. Annual carrying costs are 50% of the average carried inventory. To purchase the required cement, Harun has to spend $75 per bag. He asks for your suggestion to keep the inventory cost to the minimum level. (5) a) Determine the economic order quantity. b) What is the average number of bags in hand if he follows your suggestion? c) How many orders per year will there be in that case? d) What is the order cycle if the bakery operates 290 days a year? e) Compute the total cost of ordering and carrying cement. 4. Harun's shop buys cement in 50pound bags. The shop purchases an average of 6075 bags a year. Preparing an order and receiving a shipment of cement involves a cost of $4 per order. Annual carrying costs are 50% of the average carried inventory. To purchase the required cement, Harun has to spend $75 per bag. He asks for your suggestion to keep the inventory cost to the minimum level. (5) a) Determine the economic order quantity. b) What is the average number of bags in hand if he follows your suggestion? c) How many orders per year will there be in that case? d) What is the order cycle if the bakery operates 290 days a year? e) Compute the total cost of ordering and carrying cement.
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Answer rating: 100% (QA)
a To determine the economic order quantity EOQ we can use the formula EOQ sqrt2 D S H Where D Demand ... View the full answer
Related Book For
Operations Management
ISBN: 9780071091428
4th Canadian edition
Authors: William J Stevenson, Mehran Hojati
Posted Date:
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