NEW NUMBERS Chris Froome is a purchasing agent for a firm that sell components for high...

NEW NUMBERS

Chris Froome is a purchasing agent for a firm that sell components for high performance bicycles. One of the most popular components is the TDF bicycle frame which has an annual demand of 1,750 units. The cost of each frame is $675 and the inventory carrying cost is estimated to be 18% of the cost of each frame. Chris has made a study of the costs involved in placing an order for any of the frames the firm stocks, and he has concluded that the average ordering cost of $73 per order. Furthermore, it takes about one week for an order to arrive from the supplier, and the TDF operates 50 weeks per year.

a) What is the annual ordering cost?

b) What is the annual holding cost?

c) How many orders (on average) would be placed per year?

d) What is the average inventory?

e) What is the reorder point?

f) What is the EOQ?

Solutions

Expert Solution

Colby Messinger answered 1 year ago

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