3· (22 Points) You are still the inventory manager at Company Z and you have bee

Question

3· (22 Points) You are still the inventory manager at Company Z and you have been tasked with developing the best ordering policy for these following 5 items; however the company only wants to invest on average a maximum of S10,000 in inventory of these item Holding weekly | Cost % per | Reorder | Unit Cost Item Unit Cost per Week 0.2% 0.5% 0.3% 0.7% 0.4% 0.5% 0.1% 0.3% 0.6% 0.4% 0.2% 0.5% 0.8% 0.6% 0.1% Demand Cost 2500 1750 1000 3200 1850 500 850 2775 2200 975 1380 900 2975 2450 875 S25 S60 S150 S40 S90 S250 S85 S50 S225 S75 595 S125 S175 S55 S275 S1.50 S3.00 S6.00 S5.00 S2.25 S3.50 S1.75 S1.00 S4.5 S5.75 S9.00 S1.25 S3.75 S4.25 S5.50 (Show all your work to receive partial credit) **Your plant operates 52 weeks out of the year. a. Based on the budget constraint, what is the best ordering policy for each item? b. What is the total unit cost for each item? c. What is the total holding cost for each item for both the EOQ and the constrained Q? d. What is the total reorder cost for each item for both the EOQ and the constrained Q? e. What is the total cost per item for both the EOQ and the constrained Q? f. What is the total annual cost of ordering the EOQ for all 15 items? g. What is the total annual cost of ordering the constrained Q for all 15 items? h. What is the value impact of the budget constraint?

Explanation / Answer

a.) Use Prioritizing technique also known as ABC model. In this items will be classified into classes based on their demand and will be ordered accordingly. More demand of an item means more costs will be allocated for that

b.) Total Cost = holding cost + setup cost + product cost

=   DS/Q + QH/2 + PD

Ans c) D) E) F)

Item Weekly Demand (D) Holding cost (%) Reorder Cost (S) Unit Cost (P) Holding cost $ (H) EOQ= (2DS/H)^1/2 (Q) Setup cost DS/H Holding cost QH/2 Product cost PD Total Cost 1 2500 0.2 25 1.5 0.3 645 97 97 968 1162 2 1750 0.5 60 3 1.5 374 281 281 1122 1684 3 1000 0.3 150 6 1.8 408 367 367 2449 3184 4 3200 0.7 40 5 3.5 270 473 473 1352 2299 5 1850 0.4 90 2.25 0.9 608 274 274 1369 1916 6 500 0.5 250 3.5 1.75 378 331 331 1323 1984 7 850 0.1 85 1.75 0.175 909 80 80 1590 1749 8 2775 0.3 50 1 0.3 962 144 144 962 1250 9 2200 0.6 225 4.5 2.7 606 817 817 2725 4360 10 975 0.4 75 5.75 2.3 252 290 290 1450 2030 11 1380 0.2 95 9 1.8 382 343 343 3435 4122 12 1900 0.5 125 1.25 0.625 872 272 272 1090 1635 13 2975 0.8 175 3.75 3 589 884 884 2209 3977 14 2450 0.6 55 4.25 2.55 325 414 414 1382 2211 15 875 0.1 275 5.5 0.55 935 257 257 5145 5659

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.