Question: Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $ 10.00 Standard deviation of weekly

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.


Item cost	$	10.00		Standard deviation of weekly demand	20	units
Order cost	$	207.00	/order	Lead time	3	week
Annual holding cost (%)		24	% of item cost	Service probability	90	%
Annual demand		24,300	units
Average demand		486	/week

a. Determine the order quantity and reorder point. (Use Excels NORMSINV( ) function to find your z-value and then round that z-value to 2 decimal places. Do not round any other intermediate calculations. Round your final answers to the nearest whole number.)

Optimal order quantity:

Reorder point:

b. Determine the annual holding and order costs. (Do not round any intermediate calculations. Round your final answers to 2 decimal places.)

Holding cost:

Ordering cost:

c. Assume a price break of $60 per order was offered for purchase quantities of 2,100 units per order. If you took advantage of this price break, how much would you save annually? (Do not round any intermediate calculations (including number of setups per year). Round your final answer to 2 decimal places.)

Annual savings:

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $10.00 Standard deviation of Order cost $250.00 weekly demand 25 per week...

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost Order cost Annual holding cost (%) Annual demand Average demand $10.00...

Problem 11-15 (Algo) 21 B Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year TARARETE VALU TANAHTER VALITE Item coat 08.00 Standard...

Problem 11-15 Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $ 7.00 Standard deviation of weekly demand 20 per week Order...

Given the following information, formulate an inventory management system. The item is demanded 5 0 weeks a year.PARAMETERVALUEItem cost$ 9 . 0 0 Order cost$ 1 9 7 . 0 0 per orderAnnual holding cost...

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. PARAMETER Item cost Order cost Annual holding cost Annual demand Average weekly demand...

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $ 9.00 Standard deviation of weekly demand 20 per week Order cost $ 202.00...

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Iten cost Order cost Annual holding cost ($) Annual demand Average demand $ 7.00...

The following information pertains to Ramesh Company for the current year: Book income before income taxes $106,000 Income tax expense ........ 52,000 Income taxes payable for this year . 32,000...

A gyroscope, a uniform disc of radius R = 5.0 cm at the end of a rod of length l = 10 cm (Fig. 1.73), is mounted on the floor of an elevator car going up with a constant acceleration w = 2.0 m/s2....

Choose the correct option. Which of the following equations is used to calculate the operating cash flow ratio of a company? OPTIONS Total Cash / Current Liabilities = Operating Cash Flow Ratio Cash...

Read the articles on journaling and review the template provided. Identify what approach, to journaling, in the articles you found useful and why. Post to the discussion forum that you have reviewed...