Essay About Economic Order Quantity And Average Inventory

Inventory Managment
Answer of Question No. 4-1a ) The Economic order quantity can  be calculated as EOQ = [pic 1]A        =         2500                        =        19[pic 2]                        =        1.90[pic 3]Therefore     EOQ = [pic 4]                  = 223.60                 = 224 ( approximately )Given the EOQ, what is the average inventory?Average Inventory                 =  [pic 5]=  [pic 6]= 112What is the annual inventory holding cost?Annual Inventory holding cost                 = [pic 7]                                        = $1.90 x [pic 8]                                        =$212.8In minimizing cost, how many orders would be made each year?No. of orders                                 =         [pic 9]                                        =         [pic 10]                                        = 11.16                                        = 12 orders approximately                                What would be the annual ordering cost? Annual ordering cost                 =         [pic 11][pic 12]                                =         19 x 12                                =        $ 228Given the EOQ, what is the total annual inventory cost (including purchase cost)?Total Annual Inventory Cost = Annual inventory holding Cost + Annual ordering cost + purchase cost                               = 212.8 + 228   + 2500 *19                              = 47940.8What is the time between orders?Since we needs to order 12 times a year, and the lead time is 4 days, the time between orders is                            =   [pic 13]                           =   26.42What is the ROP?ROP                         =        Daily demand * Lead TimeReorder point                 =          [pic 14]                                        =         40Answer of Question No. 4-2Find the total amount spent on each item during the year.  What is the total investment for all these?[pic 15]Please check the column no. 4Find the percentage of the total investment in inventory that is spent on each item.Please check the column no. 5