Purchase Solution

EOQ, Annual Order, Time between orders & Total Annual Inventory Cost

Not what you're looking for?

Ask Custom Question

Southwood Furniture Company is a U.S.-based furniture manufacturer that offshored all of its actual manufacturing operations to China about a decade ago. It set up a distribution center in Hong Kong from which the company ships its items to the United States on container ships. The company learned early on that it could not rely on local Chinese freight forwarders to arrange for sufficient containers for the company's shipments, so it contracted to purchase containers from a Taiwanese manufacturer and then sell them to shipping companies at the U.S. ports the containers are shipped to. Southwood needs 715 containers each year. It costs $1200 to hold a container at its distribution center, and it costs $6000 to receive an order for the containers. Determine the optimal order size, minimum total annual inventory cost, number of annual orders, and time between orders.

Purchase this Solution

Solution Summary

The solution computes EOQ, Annual Order, Time between orders, and Total Annual Inventory Cost for Southwood Furniture Company.

Solution Preview

1.Opitmal Order Size/ Economic Order Quantity = (2*F*D/C)^(1/2)

F = Fixed Cost per order
D = Demand for the year
C = holding Cost

Then,

EOQ = ...

Purchase this Solution


Free BrainMass Quizzes
Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.