| 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? |
| 1a. | = Annual use in units |
| 1b. | = Cost of placing an order | Correction 1: D = annual demand in units. |
| Correction 2: IC should be listed as (IC) -- both variables are in the denominator. |
| 1c. | = Annual carrying cost per item per year | Note: C is often referred to as the carrying cost rate |
| Hint: (IC) = Annual carrying cost per item per year |
| 1d. | = Additional carrying cost per item per year for half empty warehouse space |
| Note: Warehouse space rented by Low is on-average only half full. |
| 1e. | = Total annual carrying cost per item per year (including physical inventory and empty warehouse space) |
| 1f. | = kegs per order = EOQ |
| 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 | $0.00 |
| 2 |
| 3 |
| 4 |
| 5 |
| 6 |
| 7 |
| 8 |
| 9 |
| Discussion of Question 2: |
| Question 3: | The new EOQ, based on the following information is: |
| Orders Per Year | Order Size | Processing Costs ($) | 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 | $0.00 |
| 2 |
| 3 |
| 4 |
| 5 |
| 6 |
| 7 |
| Discussion on Question 4: |
| Question 5: | The new EOQ, based on the following information is: |
| Orders Per Year | Order Size | Processing Costs ($) | Warehousing Costs ($) | Interest Costs ($) | Sum of Processing, Warehousing, and Interest Costs ($) |
| 1 | 0 | $0.00 | $2,000 |
| 2 |
| 3 |
| 4 |
| 5 |
| 6 |
| 7 |
| 8 |
| 9 |
| 10 |
| 11 |
| 12 |
| 13 |
| 14 |
| Discussion on Question 5: |
| Question 6: | The new EOQ, based on the following information is: |
| Orders Per Year | Order Size | Processing Costs ($) | Warehousing Costs ($) | Interest Costs ($) | Sum of Processing, Warehousing, and Interest Costs ($) |
| 1 | 0 | $0.00 |
| 2 |
| 3 |
| 4 |
| 5 |
| 6 |
| 7 |
| 8 |
| 9 |
| Discussion on Question 6: |
Yuzhi Zhao
Week3-Assignment-LowNailCompany1.xlsx
