Essays on Inventory Cost

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Executive Summary

Tesla Motors was developed in the year 2003 and has been the pioneer of producing the environment friendly vehicles ever since. The company has been widely known for its high performance sports cars that are equipped with the latest technology features and hinder the carbon emission, which eventually makes its vehicles environment friendly. The company is aimed towards reducing its inventory, production and distribution cost and provide high-end vehicles at low cost. The company is focused on enhancing the customer experience by means of providing them with the innovative features and design while keeping the cost low ...

Introduction

Space Age Furniture Company produces two major products, Gemini TV stand and Saturn Microwave stand. However, both of these products require a single common product, 3079. This material can only be produced on one machine and only one machinist knows how to operate it. This is one issue that results in frequent overtime for the machinist. Additionally, this material (3079) is used in both the subassemblies for Gemini TV stand and Saturn microwave stand. The major problem with the subassembly is that the minimum lot size is 1000 for both the subassemblies. Higher lot size is increasing the inventory ...

Inventory Management in Apple and Coca-Cola

Inventory Management in Apple and Coca-Cola

Introduction

Inventory management constitutes one of the major concerns of business organizations. Efficient inventory management enhances the profitability of an organization by ensuring that all activities involving inventories are well controlled (Hill, 2012). In essence, inventories entail all assets that facilitate normal business operations, and they include stock of goods for sale, the raw material for production, and materials consumed in the manufacturing process. Primarily, inventories constitute the largest item in the categories of current assets (Williams, 2015). The valuation of stocks at the end of financial year is crucial for determination of profitability ...

Part A.

The total inventory cost for RMD will be as follows if they continue with their current policy of purchasing 600 cartons per month. Total Ordering cost = $200 x 12month = $2,400 Holding cost/Carton = 20% x $6 x 120 = $24 per annum per carton Holding cost p.m = $2 per carton Total Holding Cost =$2 x 600 cartons x 12 months = $14,400 Total inventory cost = $2,400 + $14,400 = $16,800

If the RMD used the Economic Order Quantity Model;

Total Inventory Cost = (Q/2)*Ch + (D/Q)*Co = (600/2) * $24 + (7,200/600) * $200 = $7,200 + $2400 = $9,600

Part B.

Using EOQ, the total inventory costs will be as follows; With 5% ...