Insurance company chain with central inventory operation

Assignment Help Operation Management

Reference no: EM132228626

Eagle Insurance is a large insurance company chain with a central inventory operation. The company’s fastest-moving inventory item has a demand of 80,000 units per year. The cost of each unit is $200, and the inventory carrying cost is $15 per unit per year. The average ordering cost is $60 per order. It takes about 2 days for an order to arrive. This is a corporate operation, and there are 250 working days per year. (Please show all work including formulas used)

a) What is the EOQ for this item?

b) What is the average inventory level of the item if the EOQ is used?

c) What is the optimal number of orders per year?

d) What is the optimal number of days in between two consecutive orders (i.e., cycle length)?

e) What is the total annual cost of ordering and holding inventory when the EOQ is used?

f) What is the total annual cost, including cost of the terms, when EOQ is used?

g) What is the reorder point for the item when EOQ is used?

h) What is the safety stock level if the company uses a reorder point of 750 units and uses an order quantity equal to the EOQ?

i) Suppose that the ordering cost is not $60, and Eagle has been ordering 1,000 units each time an order is placed. For this order policy (of Q=1,000), to be optimal, determine what the order cost would have to be.

Reference no: EM132228626

Questions Cloud

Take advantage off to maximize its accomplishment : Ensure success at least one Opportunity datt the organization may seek to take advantage Off to maximize its accomplishment.

Health care organization planning : Select a specific health care organization and identify its mission statement. Description of constraints of selected initiative during the planning process.

Demonstrate the validity of darcys law : Demonstrate the validity of Darcys law in this instance. Estimate the coef-ficient of permeability of the sample - Data from a one-dimensional consolidation

Draw a decision tree for the decision that buyu faces : Discuss the potential profit of manufacturing all 200,000 boards now. Draw a decision tree for the decision that BUYU faces.

Insurance company chain with central inventory operation : Eagle Insurance is a large insurance company chain with a central inventory operation. What is the average inventory level of the item if the EOQ is used?

What steps can the company take to diversify its portfolio : HowRu, a private card business and its subsidiary, have a 14% share of the greeting card market. The card business is subject to seasonal cycles.

Labor relations laws : Labor Relations Laws: Select two employment laws and discuss ways to ensure that employee and labor relations activities are compliant

Explain the history of medicare : Explain the history of Medicare and the prospective payment systems that are in use today. In your answer be sure to provide examples of the payments systems.

What is eagle total annual cost : Eagle Home Goods manufactures home appliances. What is Eagle’s total annual cost, including the cost of the components purchased?

User Account

All Pages