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=4000, Co =$31, Ch =$4, 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.
a. 4 days
b. 14 days
c. 26 days
d. 46 days
Lead Time Inventory position reorder point: On hand reorder point:
a. 4 days _______ ________
b. 14 days _________ ________
c. 26 days ________ _________
d. 46 days ________ ________
The reorder point r = dm is defined as the lead-time demand for an item. In cases of long lead times, the lead-time dema...
The reorder point 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 = 9,000,...
1 6. A business is trying to identify the optimal order quantity for one of its produets. Demand 2 is constant and sells about 300 per month. Assume that the unit cost of the product is $30.00 and it costs $85 dollars to place an order. Annual holdings costs are 15% of the value 4 of the inventory. The lead times is 10 days. Answer the folloiwng inventory policy questions: 6 a. If the cost of the product is $20...
optimal reorder point in terms of number of cups)? 1. A product with an annual demand of 1000 units has C = $25.50 and Ch = $8. The demand exhibits some variability such that the lead-time demand follows a normal prob- ability distribution with u = 25 and 6 = 5. a. What is the recommended order quantity? b. What are the reorder point and safety stock if the firm desires at most a 2% probability of stock-out on any...
An automobile manufacturer stocks a certain inventory item. The daily demand for the inventory item is 20 units. The company estimates its annual holding cost for this item to be $10 per unit. The cost to place and process an order from the supplier is $200. The company operates 300 days per year, and the lead time to receive an order from the supplier is 3 working days on average. (a) Find the economic order quantity. (b) Find...
The beer distributor also sells cases of Brew With The Unnecessarily Pretentious Long Name beer (“BWTUPLN” for short), made by a small regional brewery. The demand for BWTUPLN is normally distributed with a mean of 12 cases and a standard deviation of 4 cases per day. When placing a replenishment order (directly with the brewer), it takes an average of 4 days for the order to arrive, with a standard deviation of 2 days (assume the delivery time is normally...
please read before solving thanks A products with an annual demand of 1000 units has EOQ (Economic Order Quantity)- 80. The demand during the lead time follows a normal probability distribution with u- 25 and s-5 during the reorder period. a How much safety stock is required, if the firm desires at most a 2% probability of a 4. stockout on any given order cycle? b. If a manager sets the reorder point at 30, what is the probability of...
3. Given the following inventory, calculate the Economic Order Quantity and Reorder Point. Annual Requirements (R) 7200 units Setup Cost (S) 100 per order Holding rate (k) 20% per year Unit Cost (C) 20 per unit Order lead time (LT) 6 days Number of days per year 360 Please show work including formulas for EXCEL.
Compute the safety stock (S.S.) and reorder point (ROP) for the following situation: Annual Demand = 6570 units Unit Price = $11 and no quantity discounts Ordering Cost = $25/order Holding Cost = $1.50/unit Lead Time = 5 days Desired Customer Service Level = 97.5% Assume 365 days/year and that demand and lead time are constant. Safety Stock = 10; ROP = 90 Safety Stock = 0; ROP = 90 Safety Stock = 5; ROP = 150 Safety Stock =...
Assume an inventory control system for an independent demand item where the Lead-time is 4 days and the Review Period is 15 days. The expected demand for the end-item is 20,000 units per year. Assume, further, that the manager wants to achieve a cycle service level of 95% in her Q system and she knows that the daily average demand is 10 units (demand is normally distributed). She has determined that her facility is open 250 days a year; her...
Reorder Point Shorts Company manufactures backpacks. A heavy-duty strap is one part that the company orders from an outside supplier. Information pertaining to the strap is as follows: Economic order quantity 6,300 units Average daily usage 315 units Maximum daily usage 375 units Lead time 4 days Required: 1. What is the reorder point assuming no safety stock is carried? units 2. What is the reorder point assuming that safety stock is carried? units