Home Depot Pleasanton Gardening Center needs to determine the ordering policy in the ERP system for a new retaining wall blocks. The demand forecast for the new blocks is about 1,000 units annually. To help you get a handle on the carrying and ordering costs, accounting department has given you the list of last year’s spending within warehouse and purchasing division. COST ITEM COST ($) COST ITEM COST ($) Taxes for the warehouse 2,000 Warehouse
Home Depot Pleasanton Gardening Center needs to determine the ordering policy in the ERP system for a new retaining wall blocks. The demand
|
COST ITEM |
COST ($) |
COST ITEM |
COST ($) |
|
Taxes for the warehouse |
2,000 |
Warehouse supplies |
280 |
|
Receiving and incoming inspection |
1,500 |
Research and development |
2,750 |
|
New product development |
2,500 |
Purchasing salaries & wages |
30,000 |
|
Acct. Dept. costs to pay invoices |
500 |
Warehouse salaries & wages |
12,800 |
|
Inventory insurance |
600 |
Pilferage of inventory |
800 |
|
Product advertising |
800 |
Purchase order supplies |
500 |
|
Spoilage |
750 |
Inventory obsolescence |
300 |
|
Sending purchasing orders |
800 |
Purchasing Dept. overhead |
1,000 |
Accounting department also told you that these data were compiled for handling 100,000 variety of inventory units that were carried or held during the year. You have also aware that 2000 orders were placed last year. Your job as a supervisor of supply analytics is to determine the economic order quantity (EOQ), ordering frequency per year, total ordering cost, and total inventory carrying cost, for this new product.
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