Question

Find a better schedule by reducing the number of orders and carrying some inventory. What are the savings with this new schedule?

Short answer

Inventory is the bookkeeping of goods, and basic components, including materials that a corporation consumes as well as distributed.

Step-by-step solution

Inventory

The terminventory refers to both the raw materials utilized in manufacturing and the finished commodities that are ready for sale. Stock control enables firms to reduce inventory expenditures by producing as well as receiving items on an as-needed approach.

Explanation

Inventory = Ending Inventory x Holding cost

= 88 x 2

= $176

Set up cost = Total inventories x Set up

= 3 x 90

= $270

Gear Box cost = Set up cost + Inventory

= $270 x $176

= $446

Inventory = Total ending Inventory x Holding cost

= $74 x $1

= $74

Set up cost = Planned inventory x Holding cost

= 2 x 45

= $90

Input short = $ 90 + $ 74

= $164

The total cost for the gear box and the input shaft = Gear box cost input shaft

The total cost = $ 446 + $164

= $ 610

The total saving using the least total cost method = 439