The Eiffel Tower in Paris opened a gift shop, the manager of the gift shop wants to manage the inventories of the gift shop because he is having trouble managing it. His problem is with low inventory turnover is squeezing profit margins and causing cash flow problems.
One of the top-selling merchandise at the Eiffel Tower gift shop is a model of the Eiffel Tower. Sales are 20 units per week, and the supplier charges $40 per unit. The cost of placing an order with the supplier is $45. Annual holding costs are 20% of a feeder’s value, and the gift shop operates 52 weeks per year. Management chose a 390-unit lot size so that new orders can be placed less frequently.
What is the annual cost of the current policy using a 390-unit lot size?
Please Solve in excel
Inventory manager for Home Depot is responsible for developing inventory policies for MRO inventory, including a special type of purified water to cool the factory’s machines. The water costs $4 a gallon. The cost to hold it in inventory is about 25% of the purchase cost. Because of the refrigerated trucks necessary for transportation, shipping costs are $8 per order. Each year, the factory uses 1,000 gallons of this purified water, which is not expected to change. How many gallons should Home Depot order each time to minimize total annual variable cost?
Please solve in excel
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