Case Study 3 complete OPSY v.1.docx - Mandalyne Gonzalez A03503193 1 Case Study 3 Inventory Management Wagner Fabricating Company OPSY 5315.W01

# Case Study 3 complete OPSY v.1.docx - Mandalyne Gonzalez...

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Mandalyne Gonzalez 1 A03503193 Case Study 3: Inventory Management – Wagner Fabricating Company OPSY 5315.W01 Mandalyne Gonzalez A03503193
Mandalyne Gonzalez 2 A03503193 Managerial Report 1. An analysis of the holding costs, including the appropriate annual holding cost rate: a. Annual Holding Cost Rate = 22% i. Annual HoldingCost = Cost of Capital + Taxes Insurances + Shrinkage + WarehouseOverhead Inventory ii. Annual HoldingCost = 0.14 + 24000 + 9000 + 15000 600000 = 0.22 b. Supplier Holding Cost = \$3.96 i. HoldingCost = Annual Holding Cost Rate×Cost per Part ii. HoldingCost = 0.22 ×\$ 18 = \$ 3.96 c. Manufacturing Holding Cost = \$3.74 i. HoldingCost = 0.22 ×\$ 17 = \$ 3.74 ii. The manufacturing holding cost is \$0.22 less than the supplier holding cost. 2. An analysis of ordering costs, including the appropriate cost per order from the supplier a. Ordering Costs from Supplier = \$75 per order i. OrderingCosts = ( processing time×salary average per hour ) + telephone, paper , postage costs ii. OrderingCosts = ( 2 hrs ×\$ 28 / hr ) + \$ 2375 125 orders = \$ 75 3. An analysis of setup costs for the production operation a.