Franz Beckenbauer and Johan Cruyff are purchasing managers for the headquarters of a large sports marketing company chain with a central inventory operation. Their fastest-moving inventory item has a daily demand of 35 units. The cost of each unit is £200, and the inventory carrying cost is £25 per unit per year. The average ordering cost is £60 per order. It takes about 5 days for an order to arrive, and there are 252 working days per year. 3A. To minimize the cost, how many units should be ordered each time an order is placed? What is the total annual inventory cost, including the cost of the units? 3B. How can they manage the days it takes for an order to arrive?

Franz Beckenbauer and Johan Cruyff are purchasing managers for the headquarters of a large sports marketing company chain with a central inventory operation. Their fastest-moving inventory item has a daily demand of 35 units. The cost of each unit is £200, and the inventory carrying cost is £25 per unit per year. The average ordering cost is £60 per order. It takes about 5 days for an order to arrive, and there are 252 working days per year. 3A. To minimize the cost, how many units should be ordered each time an order is placed? What is the total annual inventory cost, including the cost of the units? 3B. How can they manage the days it takes for an order to arrive?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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Thomas Kratzer is tbe purchasing manager for theheadquarters of a la rge insurance company chain with a centralinventory operation. Thomas's fas test-moving inventory itemhas a demand of 6,000 units per year. The cost of each unit is$ 100, and the inventory carrying cost is $10 per unit per year. The average ordering cost is $30 per order. It takes about 5 days for anorder to arrive, and the demand for I week is 120 units. (This is acorporate operation, and there are 250 working days per year.)a) What is the EOQ?b) What is the average inventory if the EOQ is used?c) What is the optimal number of orders per yea r?d) What is the optimal number of days in between any two orders?e) What is the annual cost of ordering and holding inventory?f) What is the total annual inventory cost, including the cost ofthe 6,000 units?
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Thomas Kratzer is the purchasing manager for theheadquarters of a large insurance company chain with a centralinventory operation. Thomas’s fastest-moving inventory item hasa demand of 6,000 units per year. The cost of each unit is $100, and the inventory carrying cost is $10 per unit per year. The aver-age ordering cost is $30 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 120 units. (This is acorporate operation, and there are 250 working days per year.)a) What is the EOQ?b) What is the average inventory if the EOQ is used?c) What is the optimal number of orders per year?d) What is the optimal number of days in between any two orders?e) What is the annual cost of ordering and holding inventory?f ) What is the total annual inventory cost, including the cost ofthe 6,000 units?
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Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 6,050 units per year. The cost of each unit is $99, and the inventory carrying cost is $11 per unit per year. The average ordering cost is $29 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 121 units. (This is a corporate operation, and there are 250 working days per year). The EOQ is 178.61 The average inventory if the EOQ is used is 89.30 units The optimal number of orders per year is 33.87 orders What is the optimal number of days in between any two orders? _days (round response to two decimal places).
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