What order quantity will minimize the total inventory cost, Operation Management

Assignment Help:

Question:

You are the Operations Manager at Alien University and one of your responsibility is to manage the supplies of the University. One of your supplier has given you quantity discounts for the purchase of marker pens. The normal cost for the marker pen is Rs 5.00. For orders between 1,000 and 1.999 units, the unit cost drops to Rs 4.80; for orders of 2,000 or more units, the unit cost is only Rs 4.75. Furthermore, ordering cost is Rs 49.00 per order and from your records you found that the University uses 5,000 marker pens per year. You have estimated that the inventory carrying charge is 20% of unit cost.

a) What order quantity will minimize the total inventory cost?

b) Since your University is a good customer, the supplier has offered another price break. If you order 2,500 or more marker pens at a time, the unit cost drops to Rs 4.60. What is the optimal order quantity now?

c) Management of the Alien University is seeking your advice to improve inventory management at the University. Could you please suggest the types of inventory counting systems available and new technology for collecting data?


Related Discussions:- What order quantity will minimize the total inventory cost

Explain comparison of processes with a direct adversary, 1. A simulation mo...

1. A simulation model goes one step further than possible with analysis tools, because it can show how the process performs ____________ over time. 2. A(n) ____________ is a met

Explain standard rules of overtime pay, What are the standard rules of over...

What are the standard rules of overtime pay? Provide examples of why it is not always simple to administer. Address issues such as double pay, pyramiding, compulsory overtime, and

Explain development of the germ theory of disease, In the 19th century hosp...

In the 19th century hospitals had notorious reputations questionable places to visit, risky places to stay. What advances changed all this? a.development of the germ theory of d

Logical process modeling, What is logical process modeling? What is physica...

What is logical process modeling? What is physical modeling?

Explain business buying decision processes, Explain the eight general strat...

Explain the eight general strategies in the business buying decision processes.

Hill approach to manufacturing operations, Hill Approach to Manufacturing O...

Hill Approach to Manufacturing Operations - Operation Management  Hill's five step approach to developing manufacturing operations illustrated in table below (Hill, 1993). A

Process flow and layouts, process flow and layout flows are at the core of ...

process flow and layout flows are at the core of lean manufacturing, do you agree or disagree?

Explain competitive position through differentiation, In both Europe and No...

In both Europe and North America, established airlines are desperately cutting costs in order to compete with the increasing number of budget airlines. However, it is highly unlike

Define frame relay is a technology that does noerror control, Frame relay i...

Frame relay is a technology that does no error control. If a frame arrives garbled, it is dropped and frame relay does not inform the transmitter. Is this a reasonable approach?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd