Question

Problem 14-3 (Algorithmic)

The reorder point r = dm is defined as the lead-time demand for an item. In cases of long lead times, the lead-time demand and thus the reorder point may exceed the economic order quantity Q*. In such cases, the inventory position will not equal the inventory on hand when an order is placed, and the reorder point may be expressed in terms of either the inventory position or the inventory on hand.

Consider the economic order quantity model with D=5250, Co =$35, Ch =$3, and 250 working days per year. Identify the reorder point in terms of the inventory position and in terms of the inventory on hand for each of the following lead times. When required, round your answers to the nearest whole number.

Lead Time | Inventory position reorder point | On hand reorder point

a. 6 days

b. 14 days

c. 26 days

d. 43 days

Region above is a table. Please calculate both reorder points for each lead time. Thank you!!

Answer #1

The reorder point r = dm is defined as the
lead-time demand for an item. In cases of long lead times, the
lead-time demand and thus the reorder point may exceed the economic
order quantity Q*. In such cases, the inventory position
will not equal the inventory on hand when an order is placed, and
the reorder point may be expressed in terms of either the inventory
position or the inventory on hand. Consider the economic order
quantity model with...

Cress Electronic Products manufactures components used in the
automotive industry. Cress purchases parts for use in its
manufacturing operation from a variety of different suppliers. One
particular supplier provides a part where the assumptions of the
EOQ model are realistic. The annual demand is 2,500 units, the
ordering cost is $40 per order, and the annual holding cost rate is
25%.
(a)
If the cost of the part is $20 per unit, what is the economic
order quantity?
(b)
Assume...

compute the reorder point when weekly demand is 100 units, lead
time is 2 weeks, the desired service level is 98% (which
corresponds to z-2.06, standard deviations from the mean) and the
standard deviation of demand during lead time is 30 units.

R & B beverage company has a soft drink product that has a
constant annual demand rate of 3600 cases. A case of the soft drink
costs R & B $3. Ordering costs are $20 per order and holding
costs are 25% of the value of the inventory. R & B has 250
working days per year, and the lead time is 5 days. Identify the
following aspects of the inventory policy: a. Economic order
quantity b. Reorder point d....

MNO has an average annual demand for red, medium polo shirts of
100,000 units. The cost of placing an order is $500 and the cost of
carrying one unit in inventory for one year is $20.
Required:
a. Use the economic-order-quantity model to determine the
optimal order size.
b. Determine the reorder point assuming a lead time of 12 days
and the store is open 250 days in the year.
c. Determine the safety stock required to prevent stockouts
assuming...

Suppose that the R&B Beverage Company has a soft drink
product that shows a constant annual demand rate of 3750 cases. A
case of the soft drink costs R&B $2. Ordering costs are $21 per
order and holding costs are 24% of the value of the inventory.
R&B has 250 working days per year, and the lead time is 5 days.
Identify the following aspects of the inventory policy:
Economic order quantity. If required, round your answer to two
decimal...

For a particular SKU, the lead time is 6 weeks, the average
demand is 100 units a week, and safety stock is 200 units. What is
the average inventory if 10 weeks’ supply is ordered at one time?
What is the order point?
The standard deviation of demand during the lead time is 100
units.
Calculate the safety stock required for the following service
levels: 75%, 80%, 85%, 90%, 95%, and 99.99%.
Calculate the change in safety stock required to...

Problem 14-13 (Algorithmic)
Wilson Publishing Company produces books for the retail market.
Demand for a current book is expected to occur at a constant
annual rate of 6900 copies. The cost of
one copy of the book is $14.50. The holding cost is based
on an 15% annual rate, and production setup costs
are $160 per setup. The equipment on which the
book is produced has an annual production volume of 21500
copies. Wilson has 250 working days per year,...

Problem 3 (Variation & Safety Stock)
Period
Demand
1
1200
2
1000
3
800
4
900
5
1400
6
1100
7
1100
8
700
9
1000
10
800
By using excel
Average=1000
STDEV=211
Assume the lead time is one period and that the
hospital wants a 99.90% service level.
Please calculate the following questions:
a) Average demand during lead time
b) Appropriate safety stock
c) The reorder point (stock quantity in inventory that would
trigger the order)

For each answer, indicate ‘T’ for TRUE or ‘F’ for FALSE. (Please
only specify ‘T’ or ‘F’ – the grading criteria requires only a
single letter.) ***Read these
carefully***
a) T or F: The longer the lead time for replenishment of
inventory, the larger the order size must be. _____
b) T or F: Automating the ordering process so as to reduce the
fixed administrative costs for placing orders should result in a
reduction in cycle inventory (assuming the proper application...

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