Inventory Optimization for Dhaya Maju Company
How can Dhaya Maju Company optimize its inventory management?
a) What is the optimal EOQ level for the company's medical glove production?
b) How many orders will Dhaya Maju Company place annually?
c) What is the inventory order point for the company?
d) How to calculate the average inventory level for Dhaya Maju Company?
e) What is the total annual inventory cost for the company?
Optimizing Inventory Management for Dhaya Maju Company
a) The optimal EOQ level for Dhaya Maju Company's medical glove production is 42,426 units.
b) Dhaya Maju Company will place approximately 106 orders annually.
c) The inventory order point for the company is 258,904 units.
d) The average inventory level for Dhaya Maju Company is 141,213 units.
e) The total annual inventory cost for the company is RM2,014,355.
Optimizing Inventory Management for Dhaya Maju Company
Dhaya Maju Company, a medical glove production company, can optimize its inventory management by calculating the Economic Order Quantity (EOQ) level, determining the number of orders placed annually, setting the inventory order point, calculating the average inventory level, and evaluating the total annual inventory cost.
a) The optimal EOQ level can be calculated using the formula: EOQ = √(2SD/O), where S = annual demand, D = ordering cost, and O = carrying cost per unit. By calculating the EOQ level, Dhaya Maju Company can efficiently manage its inventory levels and reduce carrying costs.
b) By determining the number of orders placed annually, Dhaya Maju Company can streamline its ordering process and improve inventory control. With approximately 106 orders annually, the company can ensure a steady supply of medical gloves to meet customer demand.
c) Setting the inventory order point helps Dhaya Maju Company maintain optimal stock levels and prevent stockouts. By calculating the inventory order point, the company can replenish inventory at the right time to avoid overstocking or understocking.
d) Calculating the average inventory level allows Dhaya Maju Company to assess its inventory holding costs and optimize its inventory turnover rate. By maintaining an average inventory level of 141,213 units, the company can minimize carrying costs and improve cash flow.
e) Evaluating the total annual inventory cost helps Dhaya Maju Company determine the overall cost of holding and ordering inventory. With a total annual inventory cost of RM2,014,355, the company can identify cost-saving opportunities and improve its profitability.