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Social Science Clinic => Business => Finance => Topic started by: geodog55 on May 1, 2019

Title: Manfred Manufacturing is involved in the production of machine parts. The company uses 600,000 ...
Post by: geodog55 on May 1, 2019

Manfred Manufacturing is involved in the production of machine parts. The company uses 600,000 pounds of steel annually. The current purchasing cost for steel is $3.20 per pound. The carrying cost for inventory is 10 percent of the purchase price. The cost of ordering steel is $800 per order. The company has decided to maintain a safety stock of 15,000 pounds. The delivery time per order is 6 days. The company works 365 days a year.

a.	Determine the optimal EOQ.

b.	How many orders will be placed annually?

c.	What is the average inventory?

d.	What is the inventory order point? (That is, at what level of inventory should a new order be

placed?)

e.	What is the company's total inventory cost for the year?

Title: Manfred Manufacturing is involved in the production of machine parts. The company uses 600,000 ...
Post by: Hikerman221 on May 1, 2019

a.	Q* =  =  54,772 lbs.

b.	Number of orders placed annually =  = 10.95

c.	Average inventory =  + 15,000 = 42,386 lbs.

d.	15,000 lbs. + ((600,000/365 ) × 6) lbs. = 24,863 lbs.

e.	Total inventory cost = (42,386)(.10)($3.20) + 10.95($800) = $22,324

Title: Manfred Manufacturing is involved in the production of machine parts. The company uses 600,000 ...
Post by: geodog55 on May 1, 2019

Thank you!

Title: Manfred Manufacturing is involved in the production of machine parts. The company uses 600,000 ...
Post by: Hikerman221 on May 1, 2019

Always glad to help...

Title: Re: Manfred Manufacturing is involved in the production of machine parts. The company uses 600,000 .
Post by: Shahd Abushtayy on Dec 19, 2020

Tank you

Title: Re: Manfred Manufacturing is involved in the production of machine parts. The company uses 600,000 .
Post by: Nur Amalina on Jul 26, 2021

thank you