Firm B has annual sales of 8,008 units of its inventory. Presently, it purchases its inventory...

 

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Firm B has annual sales of 8,008 units of its inventory. Presently, it purchases its inventory 8 times a year, and maintains 308 units of its inventory as safety stock. Its inventory carrying cost is RM1.95 per unit per year, whereas its ordering cost is RM46.20 per order. [15 marks] [A] What is the firm's total ordering cost of inventory under its present inventory management arrangement? [1.5 marks] [B] What is the firm's order quantity under its present inventory management arrangement? [1.5 marks]] [C] What is the firm's total carrying cost of inventory under its present inventory management arrangement? [2.5 marks] [D] What is the firm's re-order point- at what level of inventory should the firm re-order for new supply of inventory- under its present inventory management arrangement? [0.5 mark] [E] If the firm adopts the EOQ model of inventory management, what should the order quantity be? [3 marks] [F] If the supplier takes four days to deliver the order of inventory, and you advise the firm to reduce its safety stock to just a week's demand for inventory, what should the firm's re-order point be, under the proposed inventory management arrangement? (Assume 52 weeks a year and 7 days a week) [2 marks] [G] What is the savings in the total inventory (both carrying and ordering) costs arising from switching from the present arrangement to the proposed (including EOQ) arrangement? [3] marks] Firm B has annual sales of 8,008 units of its inventory. Presently, it purchases its inventory 8 times a year, and maintains 308 units of its inventory as safety stock. Its inventory carrying cost is RM1.95 per unit per year, whereas its ordering cost is RM46.20 per order. [15 marks] [A] What is the firm's total ordering cost of inventory under its present inventory management arrangement? [1.5 marks] [B] What is the firm's order quantity under its present inventory management arrangement? [1.5 marks]] [C] What is the firm's total carrying cost of inventory under its present inventory management arrangement? [2.5 marks] [D] What is the firm's re-order point- at what level of inventory should the firm re-order for new supply of inventory- under its present inventory management arrangement? [0.5 mark] [E] If the firm adopts the EOQ model of inventory management, what should the order quantity be? [3 marks] [F] If the supplier takes four days to deliver the order of inventory, and you advise the firm to reduce its safety stock to just a week's demand for inventory, what should the firm's re-order point be, under the proposed inventory management arrangement? (Assume 52 weeks a year and 7 days a week) [2 marks] [G] What is the savings in the total inventory (both carrying and ordering) costs arising from switching from the present arrangement to the proposed (including EOQ) arrangement? [3] marks]

Answer rating: 100% (QA)

A The firms total ordering cost can be calculated using the following formula Total Ordering Cost Annual DemandOrder Quantity x Ordering Cost per Orde... View the full answer