What is the difference in inventory costs between the eoq

Question 1:

Lott Manufacturing, Inc. has been ordering parts for its production process in lots of 10,000 units. Each order costs the firm $50 to place and holding costs per unit aver $3. Lott uses 200,000 units every 250 days.

a. Calculate EOQ

b. What is the difference in inventory costs between the EOQ and the current order quantity of 10,000 units?

c. Given the EOQ calculated in part a., how many orders should be placed and what is the average inventory balance?

d. If it takes two days to receive an order from suppliers, at what inventory level should Lott place another order?

Must show all formulas and steps in solving equations.

Question 2:

Assuming order costs are $55 per order, total periodic demand is $100,000 units and the EOQ is 24,000 units, calculate the implied per unit holding cost?

Question 3:

Below is presented table of data for cost of goods sold and ending inventory for the first six months of 2012 for Wynn Manufacturing, Inc.

                                                DEC    JAN    FEB    MAR   APR   MAY  JUNE___________

Cost of goods sold                              1000    1500   2100   2700   3500   4800

Ending Inventory_________________300    _ 450      630      810 _ 1050__1440____________

You may assume that each month has 30 days

a. Calculate the number of days of cost of goods sold held in inventory for March, April, May, and June assuming quarterly cost of goods sold is used to calculate average daily costs of goods sold.

b. Discuss your findings in part a.  What is happening with the firm's investment in inventory?

c. Below is a purchasing schedule and a schedule showing the dollar amount of those purchases remaining as an inventory balance for successive months. Calculate a balance fraction matrix and discuss what it shows about the firm's management of its inventory balance.

                                                ENDING INVENTORY BALANCES


Feb                                          1650                330174

Mar                                          2280 456             234

Apr                                          2880                                                    576302

May                                         3740                                                                748402

June                                         5190                                                                                        1038

End of Month Inventory                                        NA           63081010501440_

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