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Operation Management

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Operation Management
II
S tandard d eviation o f weekly d emand
SKU service level

WC219

$0.15

13,000

WC008

1.20

22,500

WC916

3.25

400

WC887

0.41

6;200

WC397

4.65

12,300

WC654

2.10

350

WC007

0.90

225

WC419

0.45

6,500

WC971

7.50

2,950

WC713

1 200

1,500

9 0 p ercent

C urrent o n-hand inventory 3 5 calculators

Scheduled receipts

2 0 c alculators

Backorders

Exhibit 12.13 ABC D ata f or Problem 3

3.75 calculators

2 calculators

a. What is t he Economic O rder Q uantity?
b. What is the t otal a nnual o rder a nd i nventoryholding costs for the EOQ?
c. What is t he reorder p oint w ithout s afety stock?
d. Whatis the reorder point with safety stock?
e. Based o n t he previous information, s hould a fixed o rder q uantity be placed, a nd i f so, for h ow m any c alcula to rs ?
7. Crew Soccer Shoes Company is considering a change o f their current inventory control system for soccer shoes.
The information regarding t he shoes isgiven below.
Average demand = 2 00 p airs/week
Lead t ime = 3 w eeks
O rder c ost = $ 65/order

4. MamaMia's Pizza purchases its pizza delivery boxes f rom a p rinting supplier. M amaMia's delivers on­ average 2 00 pizzas each m onth (assume deterministic demand). Boxes cost 2 0 cents each, a nd e ach o rder c osts $ 10 t o process. Because o f limited storage space, the manager w ants t o c harge inventory hold­ ingat 3 0 p ercent o f the cost. The lead time is 7 days, a nd t he restaurant is open 3 60 days per year, assum­ ing 3 0 days per m onth. D etermine the economic or­ der quantity, reorder p oint a ssuming no safety stock, nurnber o f o rders per year, a nd t otal annual cost.
5. Refer to the situation in Problem 4. Suppose the manager o f M amaMia's c urrent o rder q uantity is
2 00 boxes. H ow m uch c an be saved by a dopting a n
E OQ versus their c urrent Q = 2 00?
6. H igh Tech, Inc. is a v

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