Question

Jill's Job Shop buys two parts (Tegdiws and Widgets) for use in its production system from two different suppliers. The parts are needed throughout the entire 52-week year. Tegdiws are used at a relatively constant rate and are ordered whenever the remaining quantity drops to the reorder level. Widgets are ordered from a supplier who stops by every five weeks. Data for both products are as follows:

ITEM	TEGDIW			WIDGET
Annual demand		13,000			6,000
Holding cost (% of item cost)		30	%		10	%
Setup or order cost		$200.00			$15.00
Lead time		3	weeks		5	weeks
Safety stock		40	units		4	units
Item cost		$5			$6

a.	What is the reorder quantity and reorder point for Tegdiws? (Round your answers to the nearest whole number.)

Optimal reorder quantity	units
Reorder point	units

b.	What is the inventory control system for Widgets? (Round your answer to the nearest whole number.)

  Inventory control system for Widgets q =  ? I (Inventory on hand)

Answer 1

What is the reorder quantity and reorder point for Tegdiws?

EOQ (Q) = = = 1861.89 = 1862

RP = DL+ SS =( (13000/52)* 3) +40 =790

Optimal reorder quantity = 1862

Reorder point = 790

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b) What is the inventory control system for Widgets?

Widget = Fixed Time period model

Let I the current (on-hand) inventory. Since it is not given, assume it to be zero

q= D( T+L) + SS-I =  

(6000/52)(5+5) + 4 – 0 = 1158.84 =1159

Therefore the current inventory system for widgets is to order 1159, based on current inventory.

(Reorder point -Every Five  Weeks! When the supplier drops by)