Question: 1. Given an EOQ model with shortages in which annual demand is 4200 units, Co = $160, Cc = $7 per unit per year, and Cs = $25, what is the order quantity?
2. If annual demand equals 1000 units, the number of working days per year is 250, Co = $300 per order and Cc = $3 per unit, how many days are between orders in the basic EOQ model?
3. The Krewe of Orpheus maintains a supply of swizzle sticks for events throughout the year. Demand for swizzle sticks is shockingly low, a quick check of krewe records from last year reveals that they used only 585,000, but the krewe president believes that they should be good stewards of what they have, so they seek to manage this inventory using the EOQ policy, although they prefer to refer to it as an EOKrewe policy for obvious reasons. Swizzle sticks are not expensive items, they cost a nickel apiece largely due to the club logo printed on each one. This also serves to increase the lead time as they can't be obtained from a standard restaurant supply house. Instead, they must be ordered with an eye towards the six day lead time. It costs $15 to place an order, most of this cost is a result of explaining the meaning of "Laissez les bons temps rouler" and why it should be printed on the edge of each swizzle stick. Holding cost is 20% of purchase price.
A retired operations management professor moves to New Orleans, joins the Krewe of Orpheus and convinces krewe leadership to buy their own swizzle stick production equipment. They invest in a medium-scale machine called the Swizzo 2025, which is capable of producing swizzle sticks at the rate of 1800 per day. What is the optimal batch size?
4. In a noninstantaneous receipt model, daily demand is 55 units and daily production is 120 units, Co = $70 and Cc = $4 per unit per year. What is the maximum inventory level? (Assume that the facility is open 365 days per year.)
5. Given an EOQ model with shortages in which annual demand is 4200 units, Co = $160, Cc = $7 per unit per year, and Cs = $25, what is the total annual shortage cost?
6. In the basic EOQ model, if annual demand is 50, carrying cost is $2 per unit per year, and ordering cost is $15, what is the EOQ?
7. The economic production quantity is 500 units (units are delivered to the user department as they come off the production line). If the firm decides to buy this item from an outside supplier rather than producing it, the economic purchase quantity would probably be (assume that inventory costs of production and purchasing an item are the same):
8. In the basic EOQ model, if lead time increases from 5 to 10 days, the EOQ will:
9. Given an EOQ model with shortages in which annual demand is 4200 units, Co = $160, Cc = $7 per unit per year, and Cs = $25, what is the annual carrying cost?
10. A product has demand during lead time of 100 units, with a standard deviation of 25 units. What safety stock provides (approximately) a 95% service level?