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A manufacturing firms places 5 orders each semester with its supplier. Each order is for an amount exactly equal to the EOQ. The firm’s order cost is $50 per order and the firm does not carry safety stock at all.

a) What is the firm’s annual inventory carrying cost?

b) Assume that in 2015 the firms incurred in annual inventory carrying cost of $2,000. What was the firm’s order cost per order in 2015?

c) Assume no demand or lead time variability. Suppose the store has 25 days of supply on hand. The daily demand is 10 T-shirts/day. The lead time for a replenishment order is 5 days

i) What is the inventory on hand at the reorder point?

ii) Assume the optimal policy for the firm is to get supplies according to a 25-days of supply policy. How many units does the store order each time? How many days will take until a new order is placed? What is the average inventory? Graph inventory level and days as in the figure above using the information calculated before. Be rigorous in your graph.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92034097

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