Jill\'s Job Shop buys two parts (Tegdiws and Widgets) for use in its production
ID: 379776 • 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 five weeks. Data for both products are as follows TEGDIW 15,000 ITEM Annual demand Holding cost (% of item cost) Setup or order cost Lead time Safety stock Item cost WID 5,000 15 % 20 % $ 160.00 $ 15.00 8 week 65 units 10 1 week 3 units 4 a. What is the reorder quantity and reorder point for Tegdiws? (Round your answers to the nearest whole number.) Optimal reorder quantity Reorder point units units b. What is the inventory control system for Widgets? (Round your answer to the nearest whole number.) Inventory control system for Widgets q = - I (Inventory on hand)Explanation / Answer
a) For TEGDIW
Annual demand (D) = 15000
Ordering cost (S) = $160
Holding cost (H) = 15% of cost = 15% of $10 = $1.5
Lead time (L) = 8 Weeks
Safety stock (SS) = 65 units
Average weekly demand (d) = D/weeks in a year = 15000/52 = 288 units
Optimal order quantity = sqrt of (2DS / H)
= sqrt of [(2 x 15000 x 160) / 1.5]
= sqrt of 3200000
= 1788.85 or rounded to 1789 units
Reorder point = d x L + SS
= 288 x 8 + 65
= 2304 + 65
= 2369 units
b) For WIDGET,
Annual demand (D) = 5000 units
Average weekly demand (d) = D/52 weeks = 5000/52 = 96 units
Lead time (L) = 1 week
Review period (T) = 5 weeks
Safety stock (SS) = 3 units
Since the on hand inventory(I) is not known it is counted as 0
q = d(L +T) + SS - I = 96(1+5) + 3 - 0 = (96 x 6) + 3 - 0 = 576 + 3 - 0 = 579 units
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