John holds the position of operations manager for a small manufacturing company. His job description includes managing inventory levels, supervision of operation, leading his team etc. Annually there is usually a quick turn over of inventory items. One of the main items (bottle caps) have a demand of 8,000 units per day. The actual cost of each unit is $150, and the inventory holding cost per years is $22.50 (or 15% of the unit price) per year. The average setup cost is $17.85. There are 300 working days per year, and it takes an order about 5 days to arrive by boat. What is the optimal number of days in between any two orders? What is the annual cost of ordering? What is the annual cost of holding inventory?
John holds the position of operations manager for a small manufacturing company. His job description includes managing inventory levels, supervision of operation, leading his team etc. Annually there is usually a quick turn over of inventory items. One of the main items (bottle caps) have a demand of 8,000 units per day. The actual cost of each unit is $150, and the inventory holding cost per years is $22.50 (or 15% of the unit price) per year. The average setup cost is $17.85. There are 300 working days per year, and it takes an order about 5 days to arrive by boat. What is the optimal number of days in between any two orders? What is the annual cost of ordering? What is the annual cost of holding inventory?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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John holds the position of operations manager for a small manufacturing company. His job description includes managing inventory levels, supervision of operation, leading his team etc. Annually there is usually a quick turn over of inventory items. One of the main items (bottle caps) have a demand of 8,000 units per day. The actual cost of each unit is $150, and the inventory holding cost per years is $22.50 (or 15% of the unit price) per year. The average setup cost is $17.85. There are 300 working days per year, and it takes an order about 5 days to arrive by boat.
What is the optimal number of days in between any two orders?
What is the annual cost of ordering?
What is the annual cost of holding inventory?
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