65 for supply item abc andrews company has been ordering 125 units based on the reco 4302686
65) For supply item ABC, Andrews Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. A new purchasing agent has been hired by the company who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information:
|
Annual demand in units |
250 |
|
Days used per year |
250 |
|
Lead time, in days |
10 |
|
Ordering costs |
$100 |
|
Annual unit carrying costs |
$20 |
Required:
Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs.
66) A jeweller orders gems in lot sizes of 1,250 gems. The annual demand for emeralds is 6,250 gems. Ordering costs are $200 per order and carrying costs are $10 per unit annually.
Required:
a.Determine the economic order quantity.
b.Determine the amount of annual cost savings if the company changes from an order size of 1,250 units to the economic order size.
c.One supplier offers a discount of $2 per unit off the purchase price of orders in lots of 625 units or more. What impact would this have on the EOQ and should the order size be changed?
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Regards,
Cathy, CS.
