CASE STUDY

Delta Products Inc.



Delta Products Inc.

Are Nikki's calculations correct, given her assumptions?

Calculation shows that Nikki has accurately calculated the total cost and EOQ for the Delta products Inc. Assumptions taken by the Nikki that were used in the calculation accurately presents the economic order quantity analysis and savings that can be made by the company. Below presented calculations verify and match the financial results that Nikki presented in the report.

Total Annual Cost and Order Quantity Calculation based on Conventional Method

Item

Annual Demand

Setup Cost

Setup Cost per Order

Holding Cost

OQ

Knob A

6000

6.2

93

3.25

1500

Knob B

3000

4.6

69

3.85

1500

Knob C

7000

7.2

108

2.75

1500

Knob D

10000

5.4

81

3.7

2000

Knob E

8400

3.8

57

4.2

1500

Knob F

9400

6.8

102

2.25

2000

Item

Number of Orders

Total Setup Cost

Average Quantity

Holding ...