Importance of Inventory Management and Tools

Operation Management 1931

Contents
MAIN BODY..............................................................................................................................................3
Problem 1................................................................................................................................................3
Problem 2................................................................................................................................................4
REFERECES...............................................................................................................................................8

MAIN BODY
Problem 1
1. EOQ= √2 D*P/C
D= demand in units
P=Ordering cost
C= Carrying cost
Weekly demand= 240 units
Annual demand= 240*52
= 12480
Ordering cost (p) = $50
Carrying cost= 3
Thus,
EOQ= √2*12480*50/3
= 645 Units
2. Annual ordering cost:
Weekly demand= 240
Annual demand= 12480
Ordering cost= 12480*50
= $624000
3. Annual carrying cost:
= 3*12480
= $37440
4. Total cost= Ordering cost + carrying cost