## Calculate annual demand for the inventory item, Operation Management

Assignment Help:

Ashish  keeps  his  inventory in special containers. Each  container occupies 10  sq fit of  store space. Only  5000 sq ft  of the storage space is available. The  annual demand for the inventory  item is 9000 containers priced at Rs. 8 per container. The  ordering cost is  estimated at Rs. 40 per order and the  annual  carrying  costs  amount to 25%  of the inventory  value.

Would you  recommend to ashish to increase  his to rage space? If  so how much should  be the  increase?

Solution :

Given D = 9000 units , A =  Rs. 40 / order , C - Rs. 8 / unit and h = 25% of Rs. 8 = Rs 2 unit / year

We have

=   √2X 9000 X 40 / 2 = 600

With  EOQ = 600 units  the  maximum  level of inventory  would  be  600 units and the space required to  hold it equals 600 X 10 = 6000 square feet.  The present capacity  being 5000  square  feet he should  increase the storage capacity  by 1000 square feet.

#### Point rating method, Point  Rating Method In  selecting  a site  of l...

Point  Rating Method In  selecting  a site  of location companies  have several  objectives, but  not  all are  of equal  importance. The relative weight a company assigns to

#### Explain collected at different points, Two samples are said to be independe...

Two samples are said to be independent if they are collected at different points in time. False True

#### Describe imagine that you are the release that might result, Search the new...

Search the news for a current event/ issue/ crises a company is dealing with today. Imagine that you are the release that might result in a favourable article. Follow the format su

#### Credibility - customer satisfaction and service quality, Credibility - Cust...

Credibility - Customer Satisfaction and Service Quality Involves trustworthiness, believability and honesty. It involves having the customer's best interests at heart. Contrib

#### Explain measures that the government could employ, What are some of the mea...

What are some of the measures that governments can take to deter, detect, and prevent terrorists organized in small groups, bunch of guys (BOG) groups, cellular organizations, or a

#### Explain what is planning, Explain what is Planning. It can be defined a...

Explain what is Planning. It can be defined as deciding in advance regarding the objectives to be pursued through the enterprise, the selection of best option course of action

#### Explain xerox customer-service teams, When it comes to how a team is design...

When it comes to how a team is designed (i.e., members, communication, goals, norms, etc.) and team leadership, which of the following statements is most true based upon the studie

#### Explain how would you measure customer profitability, How would you measure...

How would you measure customer profitability? What approach would you use in maximizing customer lifetime value? Explain

#### Describe a manufacturing company preparing to build a plant, A manufacturin...

A manufacturing company preparing to build a new plant is considering three potential locations for it. The fixed and variable costs for each alternative location are presented bel

#### Explain terms of events and patterns and structure, Select a current event ...

Select a current event and analyze it in terms of events, patterns, and structure