present different proposals (Frankel, 2013). The paper will also consider the Economic Order Quantity approach, which is proposed by Lewin to ascertain the right quantity that ought to be recommended.
What is the cost difference between Ferguson's proposal to order 4 cases each time and Patrachalski's proposal to order 32 cases each time?
Carrying cost for inventory = 32%
Ordering costs = $48 irrespective of the quantity levels ordered.
The unit cost = $112
Every year units ordered = 10,752 units
1 case = 15 units
Average lead time = 8.2 days
Standard variation = 1.7 days
Ferguson and Patrachalski each… Continue Reading...
rate, what is the cost (in U.S. dollars) to ship a TEU container from Dong Hai Supply in Chengdu, China, to IDC's Alliance Fort Worth Distribution Center?
China
United States
TEU cost from Chengdu Shanghai to Long Beach
Import tariffs and duties
Rail Cost from Port of Long Beach to Alliance Fort Worth
Transportation Cost
Therefore, the total cost altogether is $1,793.90 + $325 + $2,250 = $4,368.90
4. What is the economic order quantity (use unit price only; do not include transportation costs) if we purchase everything from CousinsAg? From Dong Hai Supply?
The Economic Order Quantity is the number of units that a firm ought to add to its inventory with every particular so as to minimize the total costs of inventory, which include shortage costs, holding costs and ordering costs (Shim and Siegel, 1999). The following calculation outlines the EOQ for Cousins Ag and Dong Hai Supply.
Dong Hai
Cousins Ag
Price per unit
80.11
85
Annual Demand
21,500… Continue Reading...
Fort Worth
TEU Shipment Charge
$1,818.23
Import tariffs and duties per TEU
$325.00
Rail Shipping Cost Long Beach to AFW
$2,250.00
Total Transportation Cost
$4,393.23
Hence, the total transportation cost for shipping a TEU container from Dong Hai Supply to AFW distribution center is $4,393.23.
Question 4
Economic order quantity (EOQ) can be delineated as the inventory order quantity level that diminishes the total cost of inventory, with regard to the most significant costs, which are carrying costs and ordering costs (Coyle et al., 2016).
i. Economic Order Quantity if we purchase everything from CousinsAg
CousinsAg
Annual Demand
21,500
Ordering Cost
$105.00
Carrying Cost
32.20%
EOQ
Thus, the EOQ is 406 units
ii. Economic Order Quantity if we purchase everything from Dong Hai Supply
Dong Hai Supply
Annual Demand
21,500
Ordering Cost
$182.00
Carrying Cost
32.20%
EOQ… Continue Reading...
