Question

A company begins a review of ordering policies for a sample of items. The company operates 52 weeks a year. The following are the characteristics of one item:

Demand = 3,380 units/year

Ordering cost = $50/order

Holding cost = $13/unit/year

Lead time = 3 weeks

Standard deviation of weekly demand = 16 units

Desired cycle service level = 98%

a) Calculate EOQ and use it to find the order interval (OI). Round the number to the nearest integer week. Hint: D/Q will give you the # of orders to place in a year; order interval = review interval.

b) Suppose the company just finished a periodic review and found 20 units of on-hand inventory, how many units should be ordered (i.e. amount to order)?

Answer #1

Jake, Inc. begins a review of ordering policies for its
continuous review system by checking the current policies for a
sample of its A items. Following are the characteristics of one
item:
Demand (D) = 94 units/week (assume 52 weeks per
year)
Ordering and setup cost (S) = $720/order
Holding cost (H) = $23/unit/year
Lead time (L) = 3 weeks
Standard deviation of weekly demand = 30 units
Cycle-service level = 82 percent
Develop the best policies for a periodic-review...

Wong Enterprises used a Continuous Review System (i.e.,
Q System) for controlling inventory for a specific end-item. The
firm operates 5 days per week and 52 weeks a year and the end-item
has the following characteristics:
Demand (D) = 20,020 units/year
Ordering Costs (S) = $40/order
Holding Costs = $1/unit/six months
Leadtime (L) = 10 days
Cycle Service Level = 94.95%
Assume that Demand is normally distributed; with Standard Deviation
of weekly demand =...

Question: Suppose Sam's Cat Hotel operates 51 weeks per year, 6
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Suppose Sam's Cat Hotel operates 51 weeks per year, 6 days per
week, and uses a continuous review inventory system. IT purchases
kitty litter for $11.00 per bag. The following informaiton is
available about these bags:
Demand=75 bags/week
Order Cost=$58.00/order
Annual holding cost=20% of cost
Desired cycle-service level=80%
Lead time-5 weeks (30 working days)
Standard deviation of weekly demand=15 bags
Current...

?Sam's Cat Hotel operates 49 weeks per? year, 5 days per week.
It purchases kitty litter for $ 6.50per bag. The following
information is available about these? bags:
Demand= 75 bags/week
Order cost? = ?$65?/order
Annual holding cost? = 25 percent of cost
Desired cycle-service level=92 percent
Lead time? = 1 ?week(s) ?(5 working? days)
Standard deviation of weekly demand? = 10 bags
Current on-hand inventory is 250 ?bags, with no open orders or
backorders.
Suppose that? Sam's Cat Hotel...

Consider a periodic review inventory system with a lead time of
two weeks and a review period of seven weeks. The standard
deviation of weekly demand is 20 and the desired service level is
86%. Annual demand is 36,000 units and there are 50 weeks in the
year. Currently, on hand inventory is 630 units. What should be the
order quantity?

Wong Enterprises used a Continuous Review System (i.e.,
Q System) for controlling inventory for a specific end-item. The
firm operates 5 days per week and 52 weeks a year and the end-item
has the following characteristics:
Demand (D) = 20,020 units/year
Ordering Costs (S) = $40/order
Holding Costs = $1/unit/six months
Leadtime (L) = 10 days
Cycle Service Level = 94.95%
Assume that Demand is normally distributed; with Standard Deviation
of weekly demand =...

a company decides to establish an EOQ for an item. The annual
demand is 200,000 units. The ordering costs are $40 per order, and
inventory-carrying costs are $2 per unit per year. Calculate the
following: A. The EOQ in units. B. Number of orders per year. C.
Annual ordering cost, annual holding cost, and annual total
cost.

Sharon Ltd has in the past ordered raw
material T in quantities of 3,000 units which is half a year’s
supply. Management has instructed you, an inventory cost
consultant, to advise them as to the most desired order quantities.
The factory closes for 4 weeks annual leave per annum.
You are given the following data:
Inventory usage rate: 125 per week, Lead time: 3 weeks
Unit price: $1.50, Annual requirement: 6,000 units
Order cost: $9.00 per order, Carrying cost: $0.30...

Azril bakery has a plant for processing deluxe breakfast rolls.
Their main line was
designed to process the nut-filled, cinnamon-flavoured deluxe roll.
The following
information is based on their current yearly data:
Demand = 19,400 units/year
Standard deviation of weekly demand, σL = 63 units
Ordering costs =RM 34/order
Holding costs = RM 15/unit/year
Cycle-service level = 80% (z for 80% = 0.84)
Lead-time = 3 weeks
Number of weeks per year = 48 weeks
a. Calculate economic order quantity,...

Sam's Cat Hotel operates 52 weeks per year and 6 days per week.
It purchases kitty litter for $17.60 per bag from its supplier. The
demand for the kitty litter is 150 bags per week. The ordering cost
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order lead time is 3 weeks. Assume EOQ model is valid in this
problem. What is the length of the inventory cycle if the Hotel
uses an...

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