You are the logistics manager for an electronics manufacturer HQ'd in the United States. A new upper management has come into power, and they are heavily focusing on the company's financial performance. One of their prime targets is the company's inventory levels globally. You have been assigned the task of looking at the company's inventory levels and making suggestions to improve performance. The director of Logistics has given you the following data set. Your job is to evaluate the following 20 SKU's and their demand patterns over the last three years.
Calculate the bulleted points below, and Assume Ordering costs and holding costs are the same for all SKU's.
- 3 period Moving average Forecast for 2014
- Reorder Point
- EOQ
- Maximum Inventory Level
- Minimum Inventory Level
- Cost of Excess AND Cost of Shortage
- Ordering Cost=$50
- Holding Cost=2.5
Once this has been done, the director will ask you to classify each part as A,B or C.
|
SKU
|
Cost
|
Sale Price
|
2013 Demand
|
2012 Demand
|
2011 Demand
|
Dollar Usage
|
%Total Dollar Usage
|
Annual Holding Cost per Unit
|
Lead Time (days)
|
|
Item 1
|
0.2
|
0.6
|
1500
|
1450
|
1350
|
|
|
|
10
|
|
Item 2
|
20
|
60
|
3
|
32
|
23
|
|
|
|
10
|
|
Item 3
|
55
|
165
|
50
|
70
|
65
|
|
|
|
10
|
|
Item 4
|
1300
|
3900
|
20
|
15
|
12
|
|
|
|
30
|
|
Item 5
|
245
|
735
|
100
|
140
|
200
|
|
|
|
10
|
|
Item 6
|
75
|
225
|
70
|
75
|
90
|
|
|
|
10
|
|
Item 7
|
10000
|
30000
|
12
|
6
|
4
|
|
|
|
90
|
|
Item 8
|
345
|
1035
|
500
|
600
|
900
|
|
|
|
60
|
|
Item 9
|
211
|
633
|
39
|
23
|
45
|
|
|
|
45
|
|
Item 10
|
0.45
|
1.35
|
3450
|
3000
|
5000
|
|
|
|
10
|
|
Item 11
|
8
|
24
|
3000
|
2300
|
3400
|
|
|
|
10
|
|
Item 12
|
10.5
|
31.5
|
450
|
750
|
650
|
|
|
|
10
|
|
Item 13
|
0.5
|
1.5
|
5000
|
10000
|
3300
|
|
|
|
10
|
|
Item 14
|
155
|
465
|
150
|
120
|
100
|
|
|
|
10
|
|
Item 15
|
1.32
|
3.96
|
4000
|
3000
|
1500
|
|
|
|
10
|
|
Item 16
|
13.6
|
40.8
|
2300
|
4000
|
3000
|
|
|
|
10
|
|
Item 17
|
3000
|
9000
|
120
|
90
|
110
|
|
|
|
90
|
|
Item 18
|
1.25
|
3.75
|
4500
|
4000
|
3300
|
|
|
|
10
|
|
Item 19
|
540
|
1620
|
90
|
80
|
20
|
|
|
|
30
|
|
Item 20
|
750
|
2250
|
300
|
200
|
500
|
|
|
|
30
|
2) Pam runs a mail order business for gym equipment. Annual demand for the TricorFlexers is $16000. The annual holding costs per unit is $2.50 and the order costs are $50. What is the EOQ?
3) Using the same holding and ordering costs as above, suppose demand for the TriFlexors doubles to 32000. Does the EOQ double as well?
4) Quizno's sells large tins of Tom Tucker's Toffee. The deli uses a periodic review system checking inventory every 10 days, at which time an order is placed for more tins. Lead time is 3 days. Average daily demand is 7 tins, so average demand during the reorder period and lead time (13 days) is 91 tins. The standard deviation of demand during this same 13 days is 17 tins. Calculate the restocking level
5) If your company has demand of 50,000 units per year and a supplier lead time for replenishment is 10 days. At what reorder point would you need to trigger another order?
6) TriCor Company manufactures a fitness product. The following data is collected for the previous year. Calculate the Reorder quantity, reorder level, maximum level of inventory and minimum level of inventory using the data below.
- Monthly Demand: 10,000
- Order Costs:$50
- Normal Usage: 500 units per week
- Max Usage: 750 units per week
- Min Usage: 250 units per week
- Reorder Period: 4-6 weeks