Total Annual Cost

Total Annual Cost: Holding Cost + Ordering Cost Holding Cost: Avg Inventory x Holding Cost per Unit Avg Inventory: EOQ/ 2 Holding Cost per Unit: Purchase Price x % of Holding Cost Ordering Cost: No. of Orders in a period x Ordering Cost per Order EOQ: 2 x Annual Demand x Co Ch EBQ: 2 x Co x D Ch-(1-D/R)

Reorder Level: Maximum Usage x Maximum Lead Time Maximum Stock Level: (ROL + EOQ) – (Minimum Usage x Minimum Lead Time) Minimum Stock Level: ROL –( Avg Usage x Avg Lead Time) Avg Stock Level: Safety Stock + ½ ( EOQ) Buffer Stock Minimum Stock Labor Capacity Ratio: Actual Hrs./Budgeted Hrs. Labor Efficiency(Productivity) Ratio: Expected Hrs. to make Actual Output x 100 Actual Hrs Production Volume (Activity) Ratio: Expected Hrs. to make Actual Output x 100 Budgeted Hrs. OR Activity Ratio: Efficiency Ratio x Capacity Ratio *Hrs required to make 1 unit: Budgeted Hrs. Budgeted Units *Expected Hrs. to make Actual Output: Actual Output x Hrs required to make 1 unit Labor Turnover: No. of leaver who required to replace Avg no of employees Helsay (Bonus): Time Allowed – Time Taken x Labor Rate 2 Rowen (Bonus): Time Taken x Time Saved x Labor Rate Time Allowed