Jill\'s Job Shop buys two parts (Tegdiws and Widgets) for use in its production
ID: 362677 • Letter: J
Question
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 four weeks. Data for both products are as follows:
What is the reorder quantity and reorder point for Tegdiws? (Round your answers to the nearest whole number.)
What is the inventory control system for Widgets? (Round your answer to the nearest whole number.)
Hint: answer what order-up-to (OUL) is.
ITEM TEGDIW WIDGET Annual demand 9,000 10,000 Holding cost (% of item cost) 15 % 30 % Setup or order cost $ 160.00 $ 30.00 Lead time 2 weeks 3 week Safety stock 40 units 6 units Item cost $ 5 $ 8Explanation / Answer
For TEGDIW :
Optimal order quantity = sqrt of (2DS / H)
= sqrt of [(2 x 9000 x 160) / 0.75]
= sqrt of 3840000
= 1960 units
Reorder point = d x L + Safety stock
= 173.08 x 2 + 40
= 346.16 + 40
= 386.16 or rounded to 386 units
For WIDGET
Order quantity (Q) = d(T+L) + Safety stock - I
= 192.31(4+3) + 6 - 0
= (192.31 x 7) + 6 - 0
= 1346.17 + 6 - 0
= 1352.17 - 0
= 1352.17 or rounded to 1352 units
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