HomeworkLib
Question

An online auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. On average...

An online auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. On average the supplier sells 21 batteries a day with a standard deviation of 10. The cost of each battery is $56 and the annual holding cost is estimated to be 25 percent of the battery’s cost. The supplier's ordering costs are estimated to be $8.50 an order. Being an online operation the supplier is open 365 days a year. It takes 5 days to get an order of these batteries from the factory.

1) If the supplier currently orders 365 batteries per month what is it current annual ordering, holding and total inventory costs?

2) What is the EOQ for these batteries (Round answer to nearest whole number)?

3) If the supplier switches to the EOQ how much money would it save on its total inventory costs?

business   Operations-Management   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Economic Order Quantity

0 0
Add a comment
Know the answer?
Add Answer to:
An online auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. On average...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • SmartBeans is Canada’s largest online retailer of fair-trade organic coffee, and imports coffee beans from several...

    SmartBeans is Canada’s largest online retailer of fair-trade organic coffee, and imports coffee beans from several countries. SmartBeans operates 300 days a year and sells an average of 150 pounds of Harar (Ethiopia) Fair Trade Organic beans a day. After ordering, beans are always shipped from Ethiopia within exactly 11 days. Annual holding costs per pound are estimated to be 15% of the per pound cost of beans. The ordering cost is $35 per order. The cost of a pound...

  • Question 3(30 marks) The Economic Order Quantity is a model used to manage inventory and to...

    Question 3(30 marks) The Economic Order Quantity is a model used to manage inventory and to decide how much of any particular item to order when stocks need to be replenished. This model determines the optimal order quantity in terms of minimizing the total inventory costs (a) Explain with the help of a graph, the Economic Order Quantity Model in inventory management? (15 Marks) (b) XYZ company manufactures mobile phones and have a strong global presence in every part of...

  • 6. Torque Manufacturing forecasts that its production will require 600,000 tons of bauxite over its planning...

    6. Torque Manufacturing forecasts that its production will require 600,000 tons of bauxite over its planning period (365 days). Demand for Torque's products is stable over time. Ordering costs amount to an average of $15 per order. Holding costs are estimated at $1.25 per ton of bauxite. The EOQ for Torque is _____ tons. 7. Following Question 6, what is the total annual cost of inventory? 8. Following Question 6, if it takes 7 days to receive an order from...

  • A local family sports store sells basketball. The store orders the balls from a manufacturer at...

    A local family sports store sells basketball. The store orders the balls from a manufacturer at a cost of $250 per order. The annual holding cost is $6 per unit per year. The purchase price of a basketball is $40 per unit per year. The store has a demand for 48,000 balls per year. The s tock is received 5 working days after an order has been placed. No backorders are allowed. Assume 300 working days a year. a. What...

  • Problem 1: Economic Order Quantity (10 points) One of the most critical stock items at the...

    Problem 1: Economic Order Quantity (10 points) One of the most critical stock items at the Milwaukee Bucks Team Shop is the Giannis Antetokounmpo jersey. Therefore, the Team Shop uses an EOQ model to manage the inventory of Antetokounmpo jerseys. The cost of the jersey from the supplier is $50 each and the Team Shop uses a 25% of cost factor to determine annual holding cost of one jersey. The company sells on average 16.4 Antetokounmpo jerseys per day. Each...

  • The ePaint Store stocks paint in its warehouse and sells it online on its Internet Web...

    The ePaint Store stocks paint in its warehouse and sells it online on its Internet Web site. The store stocks several brands of paint; however, its biggest seller is Sharman-Wilson Ironcoat paint, which has an estimated annual demand of 10,000 gallons of paint, an annual carrying cost of $0.75 per gallon, and an ordering cost of $150 per order. The company processes orders every day except on Sundays (i.e. 365-52 = 311 days). 1. Determine the optimal order size for...

  • You manage the shipping of item #A452 from your supplier. The shipments for this item are...

    You manage the shipping of item #A452 from your supplier. The shipments for this item are delivered to the nearest port, and you have to transport them to the distribution center. You have two options, truck load (TL) and less than truck load (LTL). Your company needs 5000 units of #A452 per year and it is purchased at a price of $38 per unit. Each order costs $93. Your company uses a holding charge of 0.14, a cycle service level...

  • Suppose that Westside Auto, a manufacturer of automobile generators with D = 13,000 units per year,...

    Suppose that Westside Auto, a manufacturer of automobile generators with D = 13,000 units per year, Ch = (2.00) (0.20) = $0.40, and Co = $25, decided to operate with a backorder inventory policy. Backorder costs are estimated to be $5 per unit per year. Identify the following. (Assume 250 working days per year. Round your answers to two decimal places.) (a)Minimum cost order quantity (b)Maximum number of backorders (c)Maximum inventory (d)Cycle time (in days)-----days (e)Total annual cost (in $)------$  ...

  • A local store sells toilet paper to people in the surrounding communities. The demand for the...

    A local store sells toilet paper to people in the surrounding communities. The demand for the toilet paper has been increasing and management needs to ensure that enough rolls are available to meet the increasing demand. The daily demand for the toilet paper is 400 rolls. The store operates 250 days per year. The following information is also available about the product. The cost of each roll……………………….…..$2. Ordering costs………………………………..……$100 per order Annual holding costs per unit…………… 10% of the costs...

  • Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information: Average demand =...

    Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information: Average demand = 22 units per day Average lead time = 31 days Item unit cost = $51 for orders of less than 210 units Item unit cost = $47 for orders of 210 units or more Ordering cost = $26 Inventory carrying cost = 20% The business year is 250 days Assume there is no uncertainty at all about the demand or the lead time. a....

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT