Question

2) Jill Job Shop (3 points) JAll's Job shop buys two parts (Tegdiws and Widgets) for use in its production system from two different sappliers. The parts ape needed throughout the entire S2-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 i supplier who stops by every three weeks. Data for both prodacts are as follows: tem Tegdw Widget 14110 5,000 Annual demand Holding cost (% of nom cost) | 20% Setup or order cost Lead time Safety shock Item cost |20% $150.00 $25.00 4 weeks 1 week 55 units 5 units $10.00 $2.00 ) What is the inventory control system (reorder quantity and reorder poin )for Tegdiws? b) what is the name of inventory control system for Widgets and how often do you order for Widgets?

Answer 1

a)

Annual demand (D) = 14110 units

Ordering cost (S) = $150

Holding cost (H) = 20% of cost = 20% of $10 = $2

Lead time (L) = 4 weeks

Safety stock = 55 units

Average weekly demand(d) = D/52 weeks = 14110/52 = 271.35  units

Order Quantity Q

$Q = \sqrt{\frac{2DS}{H}}$

2 14110 150

Q = 1454.82 or 1455 UNITS

Reorder point R = dL + Safety stock = (271.35*4) + 55 = 1140.4

b) For Widget we use fixed time periodic inventory model

Annual demand (D) = 5000 units

Ordering cost (S) = $25

Holding cost (H) = 20% of cost = 20% of $2 = $0.4

Lead time (L) = 1 weeks

Safety stock = 5 units

Average weekly demand(d) = D/52 weeks = 5000/52 = 96.15 units

Review period T = 3 weeks

Order Quantity Q = d(L+T) + Safety stock - on hand inventory = 96.15*(1+3)+5 -0 = 389.6 units or 390 units

Answer 2

Explanation:
Item		Tegdiw	Widget
Annual Demand	D	10000	5000
Avg. daily demand	d	27.47	13.74
Order cost ($)	S	150	25
Holding cost (% of item cost)	H	20	20
Lead time (weeks:days)	L	28	7
Cost per unit($)	C	10	2
Safety Stock (units)	SS	55	5
Tegdiw
a) EOQ= sqrt(2DS/H)=	1225	Units
H=10*20%=2
R=(D/364 days)L)+SS=	824	Units
Widget
b) For   widgets we use the fixed time periodic inventory model
	D=	5000	Units
	S=	25	$
	H=	0.4	$
	L=	1	week
	SS=	5	Units
Avg   weekly demand	d=	96.15	Units
	T=	3	weeks
Order   Quantity Q= d(L+T)+SS-on hand inventory=		390	Units