Question

* Week5 2521/activity Saved Help Save & Exit Su 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 two weeks. Data for both products are as follows: ITEM Annual defand Holding, cost (% of item cost) Setup or order cost Lead time Safety stock Item cost TEGDIN 10,000 2ex $110.ee 8 weeks 55 units 5 WIDGET 9,000 3e% $ 20.ee 3 week 2 units $ a. What is the reorder quantity and reorder point for Tegdiws? (Round your answers to the nearest whole number.) units Optimal reorder quantity Reorder point units < Prev 12 of 15 !!! Next > 69 o Search

Answer 1

Answer a.

Data given for TEGDIW:
D = Weeks operational in a year	52	weeks
P = Price per unit	5.00	$
A = Annual Demand	10000	units per year
O = Ordering cost	110	$ per order
C = Holding cost = P*20% =	1.00	$ per unit per year
d = Average Demand rate per time period = A / D = 10000/52 =	192.31	per week
LT = Lead time	8	weeks
SS = Safety stock	55.00	units

Optimal reorder quantity = Economic Order Quantity (EOQ) = √2AO/C =

1483

units

Reorder Point (ROP) = d*LT + SS =

1593

units

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Answer b.

Data given for Widgets:
D = Weeks operational in a year	52	weeks
P = Price per unit	4.00	$
A = Annual Demand	9000	units per year
O = Ordering cost	20	$ per order
C = Holding cost = P*30% =	1.2	$ per unit per year
d = Average Demand rate per time period = A / D = 9000/52 =	173.08	per week
LT = Lead time	3	weeks
R = Reorder period or Review Period	2	weeks
Restocking level = (d*(R+LT)) = 173.08*(2+3) =	865	units

Therefore,

Inventory control system for Widgets q =

865

- I (Inventory on hand)