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Procurement manager Ikbal is working on preparing a 10-day inventory management and order schedule for Dragon...

Procurement manager Ikbal is working on preparing a 10-day inventory management and order schedule for Dragon Ball Inc. The company has the following cost structure and demand structure: solve in excel and show the formula used in step by step format :

Setup(order) cost is $30, unit product cost is $20 and planned holding fraction (h) is 10%. Orders take 3 days to arrive to facility and they typically hold a 10% of lead time demand as safety stock. Daily demand is given as follows.

Day

1

2

3

4

5

6

7

8

9

10

Demand

210

70

230

160

250

170

220

200

140

350

Starting inv.

600

Ending inventory

390

Order quantity

Inventory Held (Ending Inv-Starting Inv)

Answer the following questions:

  1. What is the average daily demand?
  2. What is the reorder point (ROR)?
  3. What is the annual demand assuming a 240 workdays per year?
  4. What is the Economic Order Quantity?
  5. Complete the table based on Continuous Review Fixed Order Quantity (Q,r) Policy, and calculate the total order cost and total inventory carrying cost during the 10-day planning period.
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