question archive The Edmonton Oilers Entertainment Group orders pucks that they sell to fans for $5 each
The Edmonton Oilers Entertainment Group orders pucks that they sell to fans for $5 each
Subject:Operations ManagementPrice:2.86 Bought8
The Edmonton Oilers Entertainment Group orders pucks that they sell to fans for $5 each. Their inventory holding cost (H) is 21% of the selling price. The annual demand (D) is 512,414 pucks and they have to order (Q) 9,177 pucks at a time. Due to fluctuations in demand they keep 1,100 pucks on hand as safety stock. It costs $57 (S) for each order.
What is the annual inventory cost?
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Economic order quantity refers to quantity that should be ordered by the company that will minimize the total cost of managing the inventory.
The policy that must be followed in order to keep the operation optimal is continuous inventory system. In this system the inventory data is updated continuously. Continuous inventory focus on tracking the quantities constantly as as soon as it reaches the reorder point, economic order quantity is ordered.
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