Question

In: Operations Management

What is the inventory carrying cost per unit per year for this item?

For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual inventory (carrying and setup) cost is $600. What is the inventory carrying cost per unit per year for this item?

 

Solutions

Expert Solution

For the EOQ model,

Total Annual inventory carrying cost = total annual setup or ordering cost.

So Annual inventory carrying cost = 1/2 * (total annual inventory) = 600/2 = 300.

Average Inventory (Cycle Stock) = EOQ/2 = 200/2 = 100.

Inventory carrying cost per unit per year = 300 / 100 = $ 3 per unit per year.

Dr. OWL answered 3 years ago
Next > < Previous

Related Solutions

Demand for an item is 18644 units per year. Each order placed costs $94. The annual carrying cost percentage per item in inventory is 20 percent each.
Demand for an item is 18644 units per year. Each order placed costs $94. The annual carrying cost percentage per item in inventory is 20 percent each. The variable purchase cost is $2.5 per unit if less than 3000units will be ordered, $ 2.4 from 3000 units up to (but not including) 4000 units, and $2.3 for at least 4000 units. These are all-units discounts.(A) What is the optimal order quantity Q* for the unit cost of $2.3? Please round...
Item Inventory Quantity Cost per Unit Market Value per Unit (Net Realizable Value) A13Y 80 $26...
Item Inventory Quantity Cost per Unit Market Value per Unit (Net Realizable Value) A13Y 80 $26 $31 O5T4 162 14 11 Determine the value of the inventory at the lower of cost or market by applying lower of cost or market to each inventory item, as shown in Exhibit 9. $
An annual demand for an item is 500 units, ordering cost is 8 $, inventory carrying...
An annual demand for an item is 500 units, ordering cost is 8 $, inventory carrying interest is 20% of the purchase price per year. Purchase prices are as follows as proposed by the vendor/supplier; where the value of unit cost=10 without any discount? Discount 0% 000≤Q<300    Discount 2% 300≤Q<450 Discount 3% 450≤Q
An annual demand for an item is 500 units, ordering cost is 8 $, inventory carrying...
An annual demand for an item is 500 units, ordering cost is 8 $, inventory carrying interest is 20% of the purchase price per year. Purchase prices are as follows as proposed by the vendor/supplier; where the value of unit cost=10 without any discount? Discount 0% 000≤Q<300    Discount 2% 300≤Q<450 Discount 3% 450≤Q a) for inventory model with no discount====================================================================== a1) The economic order quantity = [EOQ] units a2) The total ordering costs = [TOC] $ a3) The total...
Lower-of-Cost-or-Market Method On the basis of the following data: Item Inventory Quantity Cost per Unit Market...
Lower-of-Cost-or-Market MethodOn the basis of the following data: $$ \begin{array}{lccc} \text { Item } & \text { Inventory Quantity } & \text { Cost per Unit } & \begin{array}{l} \text { Market Value per Unit } \\ \text { (Net Realizable Value) } \end{array} \\ \hline \text { JFW1 } & 6,330 & \$ 10 & \$ 11 \\ \text { SAW9 } & 1,140 & 36 & 34 \end{array} $$Determine the value of the inventory at the lower-of-cost-or-market by applying...
Item Cost Price Per Unit (RM) % of Cost to price Total (RM) Note Per Unit...
Item Cost Price Per Unit (RM) % of Cost to price Total (RM) Note Per Unit (RM) Total (RM) Food 18.72 40%    11,232.00                    1 46.80    28,080.00 40% of RM 28,080 Beverage 1.30 26%          780.00                    2 5.00      3,000.00 26% of RM3,000 Hall Rental 5.00 50%      3,000.00                    3 10.00      6,000.00 50% of RM6,000 AV & Equipment 4.00 50%      2,400.00                    4 8.00      4,800.00 50% of RM4,800 Carpark 2.10 70%      1,260.00...
Annual demand is 12500 units, cost per order is $60 and carrying cost per unit as...
Annual demand is 12500 units, cost per order is $60 and carrying cost per unit as a    percentage is 8%. The company works 50 weeks a year; the lead-time on all orders placed is 5 weeks. Assuming constant lead-time demand, and a unit cost of $40 what is the economic order quantity? What is the reorder point. If lead-time demand shows variability that follows a normal distribution with a mean μ =280 and a standard deviation σ =20, what will...
FQ3. Annual demand is 12500 units, cost per order is $60 and carrying cost per unit...
FQ3. Annual demand is 12500 units, cost per order is $60 and carrying cost per unit as a    percentage is 8%. The company works 50 weeks a year; the lead-time on all orders placed is 5 weeks. Assuming constant lead-time demand, and a unit cost of $40 what is the economic order quantity? What is the reorder point. If lead-time demand shows variability that follows a normal distribution with a mean μ =280 and a standard deviation σ =20, what...
Given the following inventory information… Item number Unit cost Annual usage in units Current inventory in...
Given the following inventory information… Item number Unit cost Annual usage in units Current inventory in units B8867 10 100 4500 J1252 5.25 6500 120 K9667 1.22 4000 1000 L2425 12.5 54 254 M4554 5.25 6500 120 T6334 70 500 800 W9856 .75 800 20000 X2215 1.5 8000 2000 Y3214 70 1000 500 Y6339 4 3500 125 which of the following items is not classified as C items by annual dollar usage? Which is not classified as C items by...
Data: Date Item Units Cost per unit Dec. 1 Inventory 30 $12 Dec. 10 Purchase 60...
Data: Date Item Units Cost per unit Dec. 1 Inventory 30 $12 Dec. 10 Purchase 60 $13 Dec. 20 Purchase 40 $14 Dec. 12 Sale 40 Dec. 27 Sale 15 Required: (1) Find the ending inventory and the cost of goods sold for December under the periodic inventory system using the following inventory costing methods. (a) average cost (b) FIFO (2) Also find ending inventory and the cost of goods sold for the month of December under the perpetual inventory...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT