Question
Practice question
Ace Ltd. manufactures a product and the following particulars are collected for the year ended March, 2013:
• Monthly demand (units) 25000
• Cost of placing an order (`) 10000
Annual carrying cost (` per unit) 1500
Normal usage (units per week) 5000
Minimum usage (units
• Maximum usage (unit
New Note
Re-order period (weeks) 4-6
Ace Ltd. manufactures a product and the following particulars are collected for the year ended March, 2013:
• Monthly demand (units) 25000
• Cost of placing an order (`) 10000
Annual carrying cost (` per unit) 1500
Normal usage (units per week) 5000
Minimum usage (units
• Maximum usage (unit
New Note
Re-order period (weeks) 4-6
Answers
Answered by
GPT 3.5
Based on the given information, calculate the economic order quantity (EOQ) for Ace Ltd. in order to determine the optimal order quantity that minimizes total inventory costs. Use the formula:
EOQ = sqrt((2 * D * S) / H)
where:
- D = Annual demand (25000 * 12)
- S = Ordering cost (10000)
- H = Holding cost per unit (1500)
Calculate the minimum and maximum usage in units per week using the given information. Then, calculate the re-order level in units to determine when to place a new order for the product during the re-order period of 4-6 weeks.
Additionally, analyze the impact of changing the re-order period from 4-6 weeks to a different range on the company's inventory management and costs. Determine whether changing the re-order period could be beneficial for the company or not.
EOQ = sqrt((2 * D * S) / H)
where:
- D = Annual demand (25000 * 12)
- S = Ordering cost (10000)
- H = Holding cost per unit (1500)
Calculate the minimum and maximum usage in units per week using the given information. Then, calculate the re-order level in units to determine when to place a new order for the product during the re-order period of 4-6 weeks.
Additionally, analyze the impact of changing the re-order period from 4-6 weeks to a different range on the company's inventory management and costs. Determine whether changing the re-order period could be beneficial for the company or not.