A jewelry firms buys semiprecious stones to make bracelets and rings. The supplier quotes a price of RM32 per stone. The jewelry firms operates 200 days per year. Usage rate is 25 stones per day and the supplier delivers 40 stones daily to the firm. The ordering costs are RM192.The annual costs to carry the stones are 30% of unit cost. Based on the above information, you are required to answers the following questions: i) Determine the optimal order size. ii) Compute the total annual costs if the firm order at optimal size iii) Based on past records, the supplier spends 4 working days in average to deliver the stones. Determine the point should the firm reorder.

A jewelry firms buys semiprecious stones to make bracelets and rings. The supplier quotes a price of RM32 per stone. The jewelry firms operates 200 days per year. Usage rate is 25 stones per day and the supplier delivers 40 stones daily to the firm. The ordering costs are RM192.The annual costs to carry the stones are 30% of unit cost. Based on the above information, you are required to answers the following questions: i) Determine the optimal order size. ii) Compute the total annual costs if the firm order at optimal size iii) Based on past records, the supplier spends 4 working days in average to deliver the stones. Determine the point should the firm reorder.

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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