Rio Salado Community CollegeGBS 220Assignment 10

Wagner Fabricating Company
1.Holding Cost
Cost of capital 14.0%
Taxes/Insurance (24,000/600,000) 4.0%
Shrinkage (9,000/600,000) 1.5%
Warehouse overhead (15,000/600,000) 2.5%
Annual rate 22.0%
2.Ordering Cost
2 hours at $28.00 $56.00
Other expenses (2,375/125) 19.00
Cost per order $75.00
3.Set-up Cost
8 Hours at $50.00
$400 per set-up
4. & 5.
a.Order from Supplier - EOQ model
Ch = IC = 0.22 ($18.00) = $3.96This study source was downloaded by 100000823516103 from CourseHero.com on 07-13-2021 12:18:06 GMT -05:00
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shared via CourseHero.com 2 2(3200)75* 348.163.96o
hDCQC  units
Number of orders = D/Q = 9.19/year
Cycle time = 250(Q) / D = 250(348.16) / 3200 = 27.2 days
Reorder Point:
P(Stockout) = .19 = 0.1088
r = 64 + 1.24(10) = 76.4
Safety stock = 76.4 - 64 = 12.4
Maximum inventory = Q + 12.4 = 360.56
Average inventory = Q/2 + 12.4 = 186.48
Annual holding cost = 186.48(3.96) = $738.46
Annual ordering cost = 9.19(75) = $689.35
Purchase cost = 3200($18) = $57,600
Total annual cost = $59,027.8164 z = 1.24StockoutThis study source was downloaded by 100000823516103 from CourseHero.com on 07-13-2021 12:18:06 GMT -05:00
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shared via CourseHero.com