Question

3. a) What are the relevant costs associated with inventory management?

b) What is the main objective in inventory management?

c) Describe One inventory management system.

d) The Bookstore orders books in accordance with the EOQ model. You are provided the following information: Annual Volume of Sales = 1,000,000 units (D) Ordering Cost = $64/order (Co) Holding Cost = $0.32/unit (CH) i) What is the optimal quantity to order?

ii) How many orders will be made in a year?

iii) What will be the total cost if 8000 books are ordered at a time? (Co)(D) (CH)(Q) 2(Co)(D) TC = ----- + --------- ; Q* = -------- Q 2 (CH)

Answer 1