You are asked to manage the purchases of potatoes (10 kgs per bag). The annual demand = 1200 bags, Delivered purchase cost = 30/bags, Annual carrying cost percentage= 10percent, Order cost = 50/order. The lead time is 5 working days. Assuming 24 working days per month. 5.1 Determine the Economic Order Quantity 5.2 Determine the reorder point 5.3 Determine the average inventory
You are asked to manage the purchases of potatoes (10 kgs per bag). The annual demand = 1200 bags, Delivered purchase cost = 30/bags, Annual carrying cost percentage= 10percent, Order cost = 50/order. The lead time is 5 working days. Assuming 24 working days per month. 5.1 Determine the Economic Order Quantity 5.2 Determine the reorder point 5.3 Determine the average inventory
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
Problem 17P
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You are asked to manage the purchases of potatoes (10 kgs per bag). The annual demand = 1200 bags, Delivered
purchase cost = 30/bags, Annual carrying cost percentage= 10percent, Order cost = 50/order. The lead time is 5 working days. Assuming 24 working days per month.
5.1 Determine the Economic Order Quantity
5.2 Determine the reorder point
5.3 Determine the average inventory
5.4 Suppose orders are placed only at review time. Find the optimal period and the optimal order
quantity.
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