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A wholesaler supplies 30 stuff dolls each weekday to various shops dolls are purchased from manufacturer in lots of 120 each at rupees 1200 per lot every order in cause a handling charge of 60 + a fried charge of 250 per order multiple and fractional lots also can be ordered and all orders are filled the next day the incremental cost is rupees 0.60 per year two store a doll in inventory wholesaler finances inventory investment by paying its holding company two person monthly for forward funds how many dolls should be ordered at a time to minimise total annual inventory cost?
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A wholesaler supplies 30 stuff dolls each weekday to various shops dol...
Understanding the Problem
To minimize total annual inventory costs, we need to consider the costs associated with ordering and holding doll inventory. The key components are:
- Demand: 30 dolls per weekday, leading to an annual demand of \(30 \times 5 \times 52 = 7800\) dolls.
- Ordering Cost: Each order incurs a fixed handling charge of ₹60 and a freight charge of ₹250, totaling ₹310 per order.
- Holding Cost: The cost to hold one doll is ₹0.60 per year.
Calculating Optimal Order Quantity
To find the Economic Order Quantity (EOQ), we can use the EOQ formula:
\[ EOQ = \sqrt{\frac{2DS}{H}} \]
Where:
- \(D\) = Demand (7800 dolls)
- \(S\) = Ordering cost (₹310)
- \(H\) = Holding cost per unit (₹0.60)
Calculating Values
1. Calculating EOQ:
\[ EOQ = \sqrt{\frac{2 \times 7800 \times 310}{0.60}} \]
\[ EOQ = \sqrt{\frac{4846800}{0.60}} \]
\[ EOQ = \sqrt{8078000} \approx 2843 \text{ dolls} \]
Conclusion
- The optimal order quantity to minimize total annual inventory cost is approximately 2843 dolls.
- This quantity ensures that a balance between ordering and holding costs is achieved, thereby optimizing the wholesaler’s inventory expenses over the year.
By using this approach, the wholesaler can effectively manage costs and improve profitability.
To minimize total annual inventory costs, we need to consider the costs associated with ordering and holding doll inventory. The key components are:
- Demand: 30 dolls per weekday, leading to an annual demand of \(30 \times 5 \times 52 = 7800\) dolls.
- Ordering Cost: Each order incurs a fixed handling charge of ₹60 and a freight charge of ₹250, totaling ₹310 per order.
- Holding Cost: The cost to hold one doll is ₹0.60 per year.
Calculating Optimal Order Quantity
To find the Economic Order Quantity (EOQ), we can use the EOQ formula:
\[ EOQ = \sqrt{\frac{2DS}{H}} \]
Where:
- \(D\) = Demand (7800 dolls)
- \(S\) = Ordering cost (₹310)
- \(H\) = Holding cost per unit (₹0.60)
Calculating Values
1. Calculating EOQ:
\[ EOQ = \sqrt{\frac{2 \times 7800 \times 310}{0.60}} \]
\[ EOQ = \sqrt{\frac{4846800}{0.60}} \]
\[ EOQ = \sqrt{8078000} \approx 2843 \text{ dolls} \]
Conclusion
- The optimal order quantity to minimize total annual inventory cost is approximately 2843 dolls.
- This quantity ensures that a balance between ordering and holding costs is achieved, thereby optimizing the wholesaler’s inventory expenses over the year.
By using this approach, the wholesaler can effectively manage costs and improve profitability.
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A wholesaler supplies 30 stuff dolls each weekday to various shops dolls are purchased from manufacturer in lots of 120 each at rupees 1200 per lot every order in cause a handling charge of 60 + a fried charge of 250 per order multiple and fractional lots also can be ordered and all orders are filled the next day the incremental cost is rupees 0.60 per year two store a doll in inventory wholesaler finances inventory investment by paying its holding company two person monthly for forward funds how many dolls should be ordered at a time to minimise total annual inventory cost?
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A wholesaler supplies 30 stuff dolls each weekday to various shops dolls are purchased from manufacturer in lots of 120 each at rupees 1200 per lot every order in cause a handling charge of 60 + a fried charge of 250 per order multiple and fractional lots also can be ordered and all orders are filled the next day the incremental cost is rupees 0.60 per year two store a doll in inventory wholesaler finances inventory investment by paying its holding company two person monthly for forward funds how many dolls should be ordered at a time to minimise total annual inventory cost? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about A wholesaler supplies 30 stuff dolls each weekday to various shops dolls are purchased from manufacturer in lots of 120 each at rupees 1200 per lot every order in cause a handling charge of 60 + a fried charge of 250 per order multiple and fractional lots also can be ordered and all orders are filled the next day the incremental cost is rupees 0.60 per year two store a doll in inventory wholesaler finances inventory investment by paying its holding company two person monthly for forward funds how many dolls should be ordered at a time to minimise total annual inventory cost? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A wholesaler supplies 30 stuff dolls each weekday to various shops dolls are purchased from manufacturer in lots of 120 each at rupees 1200 per lot every order in cause a handling charge of 60 + a fried charge of 250 per order multiple and fractional lots also can be ordered and all orders are filled the next day the incremental cost is rupees 0.60 per year two store a doll in inventory wholesaler finances inventory investment by paying its holding company two person monthly for forward funds how many dolls should be ordered at a time to minimise total annual inventory cost?.
A wholesaler supplies 30 stuff dolls each weekday to various shops dolls are purchased from manufacturer in lots of 120 each at rupees 1200 per lot every order in cause a handling charge of 60 + a fried charge of 250 per order multiple and fractional lots also can be ordered and all orders are filled the next day the incremental cost is rupees 0.60 per year two store a doll in inventory wholesaler finances inventory investment by paying its holding company two person monthly for forward funds how many dolls should be ordered at a time to minimise total annual inventory cost? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about A wholesaler supplies 30 stuff dolls each weekday to various shops dolls are purchased from manufacturer in lots of 120 each at rupees 1200 per lot every order in cause a handling charge of 60 + a fried charge of 250 per order multiple and fractional lots also can be ordered and all orders are filled the next day the incremental cost is rupees 0.60 per year two store a doll in inventory wholesaler finances inventory investment by paying its holding company two person monthly for forward funds how many dolls should be ordered at a time to minimise total annual inventory cost? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A wholesaler supplies 30 stuff dolls each weekday to various shops dolls are purchased from manufacturer in lots of 120 each at rupees 1200 per lot every order in cause a handling charge of 60 + a fried charge of 250 per order multiple and fractional lots also can be ordered and all orders are filled the next day the incremental cost is rupees 0.60 per year two store a doll in inventory wholesaler finances inventory investment by paying its holding company two person monthly for forward funds how many dolls should be ordered at a time to minimise total annual inventory cost?.
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