Problem 6.29 - inventory cost for the totale conomic life...

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Demand 5000 diesel engine Container 100 cubic ft Capacity 5,000 cubic ft Cost per order $10 Carrying cost $10 per engine Assuming a 360-day year EOQ 100 This should be the quantity ordered, but because of the constraint in the warehouse the company can only afford to order 50 units at a time $500 $1,000 $1,500 Note: Purchasing cost is NOT included since no data was provided for purchase cost per unit 100 14 5000 cubic ft No, the company should NOT expand This is so because with an expansion, and assuming that the expansion would allow the company to finally follow EOQ, total inventory cost and ordering cost is still equal to $1,500 - same as before Clearly, there is no benefit The cost of expansion should be equal or lower than the present value of the amount of saved up from total annual
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Unformatted text preview: inventory cost for the totale conomic life of the warehouse $1,000 $500 $1,500 What is the annual inventory carrying cost? What is the annual cost of ordering? What is the total cost, including purchasing cos What is the largest number of motors they will need to store on any given day? What is the smallest number of motors they will need to store on any given day? Assume demand is constant throughout the year. How much should Douglas Boats expand to handle their invento Do you think they should expand? How much would it be worth for the company to make the expansion?...
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