Explore BrainMass
Share

Calculating the various inventory control parameters

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

1. The Fine Garments Company sells fashion clothing. The forecasted annual demand for their premium leather jacket is 2,000. The order-processing cost per order is $40, and the inventory holding cost is $35/item/year. How many leather jackets should they order in one shipment?

2. The Fine Garments Company wants to use a reorder point system. To allow for uncertainties in delivery and customer demand, it wishes to hold four weeks of demand as safety stock. What should its reorder point be if the delivery lead time is two weeks, based on the calculated order quantity?

3. Design a periodic inventory control system for the Fine Garments Company if it wishes to hold five weeks of demand as safety stock. If on a review the inventory of the premium leather jacket is 102, how many leather jackets should be ordered?

© BrainMass Inc. brainmass.com October 25, 2018, 8:25 am ad1c9bdddf
https://brainmass.com/business/inventory/calculating-the-various-inventory-control-parameters-539853

Solution Preview

1. The Fine Garments Company sells fashion clothing. The forecasted annual demand for their premium leather jacket is 2,000. The order-processing cost per order is $40, and the inventory holding cost is $35/item/year. How many leather jackets should they order in one shipment?

D =Total demand= 2000 units per year
S = ordering cost=$40 per order
H = holding costs=$35 per unit per year ...

Solution Summary

Solution depicts the steps to estimate EOQ, reorder point, safety stock, and order quantity in the given case.

$2.19
See Also This Related BrainMass Solution

Controlling Inventory

Lila Battle has determined that the annual demand for number 6 screws is 100,000 screws. Lila, who works in her brother's hardware store, is in charge of purchasing. She estimates that it costs $10 every time an order is placed. This cost includes her
wages, the cost of the forms used in placing the order, and so on. Furthermore, she estimates that the cost of carrying one screw in inventory for a year is one-half of 1 cent. Assume that the demand is constant throughout the year.

(a) How many number 6 screws should Lila order at a time if she wishes to minimize total inventory cost?
(b) How many orders per year would be placed? What would the annual ordering cost be?
(c) What would the average inventory be? What would the annual holding cost be?

View Full Posting Details