| | | | | | | | | | Helpful formulas from the textbook: |
| | Week Three: Inventory Analysis |
| | LOW NAIL COMPANY |
| | Answer all the questions to the Low Nail Company Case. Questions can be found on page 362 in the custom textbook and page 356 of the original textbook. |
| | Use Excel & EOQ Formulas in solving all problems. Place the required Excel formula in all cells highlighted in yellow to show correct answer. Format cells appropriately. |
| | Question 1: Using the EOQ formula and the information contained in the Low Nail Case Study, how many kegs of nails should Low order at one time? |
| | The EOQ formula is: |
| | | = Annual use in units |
| | | = Cost of placing an order |
| | | | | | | | | | | Correction 1: D = annual demand in units. |
| | | = Annual carrying cost per item per year | | | | | | | | Correction 2: IC should be listed as (IC) -- both variables are in the denominator. |
| | | = kegs per order (EOQ) | | Note: Warehouse space rented by Low is on-average only half full. |
| | Discussion on Question 1: |
| | Question 2: | The new EOQ, based on the following information is: |
| | Orders per Year | Order Size | Processing Costs ($) | Warehousing Costs ($) | Sum of Processing and Warehousing Costs ($) |
| | 1 | 0 | Free |
| | 2 |
| | 3 |
| | 4 |
| | 5 |
| | 6 |
| | 7 |
| | 8 |
| | 9 |
| | Discussion of Question 2: |
| | Question 3: | The new EOQ, based on the following information is: |
| | Orders Per Year | Order Size | Processing Costs ($) | Warehousing Costs ($) | Sum of Processing and Warehousing Costs ($) |
| | 1 | 0 | $0.00 |
| | 2 |
| | 3 |
| | 4 |
| | 5 |
| | Discussion on Question 3: |
| | Question 4: | The new EOQ, based on the following information is: |
| | Orders Per Year | Order Size | Processing Costs ($) | Warehousing Costs ($) | Sum of Processing and Warehousing Costs ($) |
| | 1 | 0 | Free |
| | 2 |
| | 3 |
| | 4 |
| | 5 |
| | 6 |
| | 7 |
| | Discussion on Question 4: |
| | Question 5: | The new EOQ, based on the following information is: |
| | Orders Per Year | Order Size | Processing Costs ($) | Warehousing Costs ($) | Interest Costs ($) | Sum of Processing, Warehousing, and Interest Costs ($) |
| | 1 | 0 | $0 | $2,000 |
| | 2 |
| | 3 |
| | 4 |
| | 5 |
| | 6 |
| | 7 |
| | 8 |
| | 9 |
| | 10 |
| | 11 |
| | 12 |
| | 13 |
| | 14 |
| | Discussion on Question 5: |
| | Question 6: | The new EOQ, based on the following information is: |
| | Orders Per Year | Order Size | Processing Costs ($) | Warehousing Costs ($) | Interest Costs ($) | Sum of Processing, Warehousing, and Interest Costs ($) |
| | 1 | 0 | Free |
| | 2 |
| | 3 |
| | 4 |
| | 5 |
| | 6 |
| | 7 |
| | 8 |
| | 9 |
| | Discussion on Question 6: |
gysgtclarke
LowNailCompany1.xlsx
