Lifestyle sells 375 units per month of shirts. The unit cost of a shirt to the...

 

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Lifestyle sells 375 units per month of shirts. The unit cost of a shirt to the store is Rs.5.50 and the cost of placing an order has been estimated to be Rs.32. Lifestyle uses an inventory carrying charge of 20% per year. Determine the optimal order quantity, order frequency, and the annual cost of Inventory management. If, through automation of the purchasing process, the ordering cost can be cut to Rs.14, what will be the new economic order quantity, order frequency, and annual inventory management cost? Explain these results. [5] 3/05/21 Lifestyle sells 375 units per month of shirts. The unit cost of a shirt to the store is Rs.5.50 and the cost of placing an order has been estimated to be Rs.32. Lifestyle uses an inventory carrying charge of 20% per year. Determine the optimal order quantity, order frequency, and the annual cost of Inventory management. If, through automation of the purchasing process, the ordering cost can be cut to Rs.14, what will be the new economic order quantity, order frequency, and annual inventory management cost? Explain these results. [5] 3/05/21

Answer rating: 100% (QA)

To determine the optimal order quantity order frequency and the annual cost of inventory management for Lifestyle we can use the Economic Order Quantity EOQ formula The EOQ formula is given by EOQ 2DS ... View the full answer