Shields Carries a Part That Is Popular in the Manufacture

question 13

Essay

Shields carries a part that is popular in the manufacture of automatic sprayers.Demand for this part is 4,000 units per year;order costs amount to $30 per order,and holding costs total $1.50 per unit.The company is considering the implementation of an economic order quantity model in an effort to better manage its inventories.
Required:
A.Compute the economic order quantity.
A.The EOQ can be figured by taking the square root of: (2 x annual requirement x cost per order)¸ annual holding cost per unit.The square root of (2 x 4,000 x $30)¸ $1.50,or 160,000,is 400.
B.Compute total annual inventory costs if Shields follows the EOQ policy.
B.The ordering cost is based on 10 orders (4,000 units ¸ 400 units)x $30,and totals $300;the holding cost is computed on the company's average inventory of 200 units (400 ¸ 2)and amounts to $300 (200 x $1.50).Thus,costs at the EOQ total $600 ($300 + $300).

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Definitions:

Public Health

The science and art of preventing disease, prolonging life, and promoting health through organized efforts and informed choices of society, organizations, public and private, communities, and individuals.

Anti-Malaria

Describes treatments, medications, or practices aimed at preventing or curing malaria, a mosquito-borne infectious disease.

Pesticide Campaigns

Initiatives or programs aimed at promoting the use of or educating about pesticides for controlling pests and diseases in agriculture and other sectors.

Mosquitoes Resistant

Refers to mosquitoes that have developed the ability to survive exposure to insecticides or have developed resistance to certain diseases they previously transmitted.