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Assignment Inventory Management 12.7

This document contains several inventory management problems involving calculating economic order quantities (EOQ), reorder points, annual holding and ordering costs, and determining optimal suppliers based on order quantities and pricing structures. The problems provide information on annual demand, ordering costs, holding costs, lead times, production and usage rates, price breaks, and ask questions about EOQ, inventory levels, number of orders, total annual costs, and time between orders.

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304 views

Assignment Inventory Management 12.7

This document contains several inventory management problems involving calculating economic order quantities (EOQ), reorder points, annual holding and ordering costs, and determining optimal suppliers based on order quantities and pricing structures. The problems provide information on annual demand, ordering costs, holding costs, lead times, production and usage rates, price breaks, and ask questions about EOQ, inventory levels, number of orders, total annual costs, and time between orders.

Uploaded by

meriem
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Assignment Inventory Management

12.7
William Beville’s computer training school, in Richmond, stocks workbooks with the following
characteristics:

Demand D = 19,500 units/year


Ordering cost S = $25/order
Holding cost H = $4/unit/year

a) Calculate the EOQ for the workbooks.


b) What are the annual holding costs for the workbooks?
c) What are the annual ordering costs?
12.12
Lead time for one of your fastest- moving products is 21 days. Demand during this period averages
100 units per day.
a) What would be an appropriate reorder point?
b) How does your answer change if demand during lead time doubles?
c) How does your answer change if demand during lead time drops in half?

12.15
Joe Henry's machine shop uses 2500 brackets during the course of a year. These brackets are
purchased from a supplier 90 miles away. The following information is known about the brackets:
Annual Demand: 2500
Holding Cost per bracket per year: $1.50
Order cost per order: $18.75
Lead Time: 2 days
Working days per year: 250
a.) Given the above information, what would be the economic order quantity (EOQ)?
b.) Given the EOQ, what would be the average inventory? What would be the annual inventory
holding cost?
c.) Given the EOQ, how many orders would be made each year? What would be the annual
order cost?
d.) Given the EOQ, what is the total annual cost of managing the inventory?
e.) What is the time between orders?
f.) What is the reorder point (ROP)

12.18
Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakarta,
the company produces subcomponents at a rate of 300 per day, and it uses these subcomponets at a
rate of 12,500 per year(of 250 working days). Holding costs are $2 per item per year, and ordering
costs are $30 per order.
a) What is the economic production quantity?
b) How many production runs per year will be made?
c) What will be the maximum inventory level?
d) What percentage of time will the facility be producing components?
e) What is the annual cost of ordering and holding inventory?
12.22
Bell computers purchases integrated chips at 350 per chip. The holding cost is $35 per unit per year.
The ordering cost is $120 per order, sales are steady at 400 per month. The company supplier, rich
blue chip manufacturing inc, decides to offer price concession in order to attract large orders. The price
structure is shown below.
Quantity purchased price per unit
1-99 units $350
100-199 unit $325
200 or more units $300.
a) What is the optimal order quantity and the minimum annual cost for Bell computers to order,
purchase and hold these integrated chips? 
b) Bell computers wishes to use a 10% holding cost rather than the fixed $35 holding cost in part
a. What is the optimal order quantity, and what is the optimal annual cost?
12.26
M.P. VanOyen Manufacturing has gone out on a bid for a regular component. Expected demand is 700
units per month (not per year). The item can be purchased from either Allen Manufacturing or Baker
Manufacturing. The price lists are shown below in the table. Ordering cost is $50 per order, and annual
holding cost per unit is $5.
Allen Manufacturing Baker Manufacturing
Quantity Price / Unit Quantity Price / Unit
1 - 499 $ 16.00 1 - 399 $ 16.10
500 - 999 $15.50 400 - 799 $15.60
1,000 plus $15.00 800 plus $15.10

(a) What is the economic order quantity if price is not a consideration?


(b) Which supplier (Allen or Baker) should be used based on options with regard to discounts
(use a 26% holding cost rather than the fixed $5 holding cost in part a)?
(c) What is the optimal order quantity and total annual cost of ordering ,purchasing and holding
the component?

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