Q:
What is the total annual cost of maintaining the components inventory under the present system?
Current system Item
Average distance from vendor (in miles) Number of units used each week Current lot size purchased Unit cost Average freight cost per unit Gas range
1,145
10
200
$100
$20 Toilet
606
10
240
$80
$18 Pump
26
56
125
$16
$3 Refrigerator (large)
22
6
120
$110
$20 Refrigerator (small)
22
7
15
$95
$15 Foam cushion
490
675
1,500
$8
$2 CB radio (type D)
1,800
9
24
$136
$11 Dome lights
3
824
1,720
$2
None Awning bracket
48
540
1,200
$4
$1 Insect screen
159
570
1,240
$7
$1 Current system (continued) Item Safety stock Average inventory Total inventory Inventory cost
Inventory carrying charges
Inventory maintenance cost Gas range
40
100
140
$62,400
$3,360
$65,760 Toilet
40
120
160
$50,960
$3,136
$54,096 Pump
56
63
119
$55,328
$450
$55,778 Refrigerator (large)
6
60
66
$40,560
$1,716
$42,276 Refrigerator (small)
7
8
15
$40,040
$319
$40,359 Foam cushion
1,350
750
2,100
$351,000
$4,200
$355,200 CB radio (type D)
36
12
48
$68,796
$1,411
$70,207 Dome lights
824
860
1,684
$85,696
$674
$86,370 Awning bracket
540
600
1,140
$140,400
$1,140
$141,540 Insect screen
1,140
620
1,760
$237,120
$2,816
$239,936
