The inventory management costs for a certain product are S = $8 to order, and H = $1 to hold for a year. Annual demand is 2400 units. Consider the following ordering plans:
(a) order all 2400 at one time, (b) order 600 once each quarter, and (c) order 200 once each month. Calculate the annual holding and setup costs associated with each plan. (d) Is there another plan, cheaper than any of these? Calculate this order quantity along with its total annual holding and setup costs.
(a) TC2400 = 1($8 ) + ($1 ) = $1208.00
(b) TC600 = 4($8 ) + ($1 ) = $332.00
(c) TC200 = 12($8 ) + ($1 ) = $196.00
(d) Q* = = 196 is the cheapest solution.
TC196 = (2400/196 )($8 ) + ($1 ) = $97.96 + $98.00 = $195.96
You might also like to view...
Due to the high incidence of corporate frauds today, the direct costs of unethical business practice are less visible now than they have ever been before.
Answer the following statement true (T) or false (F)
What are the likely points of tension between states and corporations in the globalization process?
What will be an ideal response?
Which element of the expectancy theory is measured in a range from zero to +1?
a. Expectancy b. Instrumentality c. Effort d. Valence
Forge Right Inc., a manufacturing company, developed a strategic plan that assumed improved growth in its industry. Additionally, it generated several ________ for different economic settings. When a recession started, Forge Right Inc. quickly implemented the plan based on those conditions. As a consequence, it survived more easily than other firms in the industry.
A. projection statements B. financial reports C. annual reports D. scenarios E. roadmaps