The two-bin approach is used to control inventory for a particular low-cost component. Each bin\nholds 1200 units. The annual usage of the component is
The two-bin approach is used to control inventory for a particular low-cost component. Each bin
\r\nholds 1200 units. The annual usage of the component is 45,000 units. Cost to order the component
\r\nis around $70. (a) What is the imputed holding cost per unit for this data? (b) If the actual annual
\r\nholding cost per unit is only 7 cents, what lot size should be ordered? (c) How much more is the
\r\ncurrent two-bin approach costing the company annually, compared to the economic order quantity?