Please help me answer questions (f) and (g) ! MGT 250 Business Models and Quanti

Question

Please help me answer questions (f) and (g) ! MGT 250 Business Models and Quantitative Analysis Inventory Models with Planned Shortages Name: Date Submitted: Instructions: Answer all of the questions thoroughly on this assignment sheet 1. Auto Zone has decided to operate with a backorder inventory policy D-12,000 As you recall, Auto Zone's component demand is 12,000 units per yoar. Auto Zone's H0.S ordering costs are $25 per order. The unit cost is $2.50 per component and Auto Zone's annual holding costs are 20% of the value of the inventory. Also, Auto Zone's Inventory planning policy inchudes 250 working days per year and lead time of five days. Backorder costs are expected to be $5 per unit per year a Answer the following Auto Zone inventory polley questione: (a) What is Auto Zone's minimum cost order quantity? ()-1. 0.S Co.) (b) What is Auto Zone's maximum number of backorders? (c) What is Auto Zone's maximum inventory level? 1044. , 2.3.9S days (d) What is Auto Zone's cycle tine? 25 12,0001,4. 10.yo (e) What is Auto Zone's total annual inventory cost? 6.S 2(11) 237. 32 (f) What are the financial implications of Auto Zone's new inventory policy which includes backorders? (9) What are the supply chain and consumer implications of this decision?

Explanation / Answer

1)

The new inventory policy of including the backorders increases the total cost of the policy.

2)

This increases the amount of inventory in the supply chain but incerase the customer satisfaction level.

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