Average demand 12.5 calculators per week
Lead time 3 weeks
Order cost $20/order
Holding cost $1.20/calculator/year
Number of weeks 52 weeks per year
Standard deviation of weekly demand3.75 calculators
SKU service level90 percent
Current on-hand inventory35 calculators
Scheduled receipts20 calculators
Backorders 2 calculators
a.What is the Economic Order Quantity?
147.2 or 147 calculators
b.What is the total annual order and inventory-holding costs for the EOQ?
$88.2 + $88.2 = $176.40.
c.What is the reorder point without safety stock?
d.What is the reorder point with safety stock?
45.6 -> 46 calculators
e.Based on the previous information, should a fixed order quantity be placed, and if so, for how many calculators?
Inventory position (IP) is defined as the on-hand quantity (OH) plus any orders placed but which have not arrived (called scheduled receipts, SR), minus any backorders (BO), or
IP = OH + SR – BO = 35 + 20 – 2 = 53[12.1]
FOQ Order Decision Rule: Place a new order for 147 calculators when the inventory position drops to or past the reorder point of 38 (w/o calculators) and 46 with safety stock. Since the IP is greater than either reorder point, do NOT place an EOQ = 147 calculators yet.
7.Crew Soccer Shoes Company is considering a change of their current inventory control system for soccer shoes. The information regarding the shoes is given below.
Average demand = 200 pairs/week
Lead time = 3 weeks
Order cost = $65/order
Holding cost =...