3 Problem 20-17 Jill\'s Job Shop buys two parts (Tegdiws and Widgets) for use in
ID: 356556 • Letter: 3
Question
3 Problem 20-17 Jill's Job Shop buys two parts (Tegdiws and Widgets) for use in its production system from two different suppliers. The parts are needed throughout the entire 52-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 a supplier who stops by every three weeks. Data for both products are as follows: points ITEM Annual demand Holding cost (% of item cost) Setup or order cost Lead time Safety stock Item cost WIDGET 10,000 5,000 20 % 20 % eBook $150.00 $25.00 4 weeks 55 units 1 week 5 units $ 10.00 $ 2.00 Print a. What is the reorder quantity and reorder point for Tegdiws? (Do not round References intermediate calculations. Round your answers to the nearest whole number.) Optimal reorder quantity Reorder point units units b. What is the inventory control system for Widgets? (Do not round intermediate calculations. Round your answer to the nearest whole number.) Inventory control system for Widgets q - I (Inventory on hand)Explanation / Answer
a) For TEGDIW
Optimal order quantity = sqrt of (2DS / H)
= sqrt of [(2 x 10000 x 150)/2]
= sqrt of 1500000
= 1225 units
Reorder point = d x L + Safety stock
= 192.31 x 4 + 55
= 769.24 + 55
= 824.24 or rounded to 824 units
b) The inventory control system for Widget is a periodic review system. Where review period(T) = 3 weeks
Annual demand (D) = 5000 units
Number of weeks per year = 52 weeks
Average weekly demand (d) = 5000/52 = 96.15 units
Lead time (L) = 1 week
Safety stock = 5 units
Inventory on hand (I) = 0 (As it is not given)
Order quantity = d(L +T) + Safety stock - I
= [96.15(1+3)] + 5 - 0
= (96.15 x 4) + 5 - 0
= 384.6 + 5 - 0
= 389.6 - 0
= 389.6 or rounded to 390 units
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