2. ( Economic Order Quantity & Reorder Point. The annual demand for an item is 20,000...

 

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2. ( Economic Order Quantity & Reorder Point. The annual demand for an item is 20,000 units per year. It costs £40 to place an order and £10 per year to store an item in inventory. Assume that the company operates 365 days per year. a. (3 points) What is the Economic Order Quantity? b. (3 points) How many orders are placed per year? C. (3 points) How long is the time between placing orders? d. (3 points) How much is the annual ordering cost? e. (3 points) What is the minimum inventory held? f. (3 points) What is the maximum inventory held? g. (3 points) What is the average inventory held? h. (3 points) How much is the annual inventory holding cost? Now assume lead time is 5 days. Standard deviation of (normally distributed) daily demand is 10 units. Required availability is 90%. i. (3 points) How much safety stock is needed? j. (3 points) What should the reorder point be? 2. ( Economic Order Quantity & Reorder Point. The annual demand for an item is 20,000 units per year. It costs £40 to place an order and £10 per year to store an item in inventory. Assume that the company operates 365 days per year. a. (3 points) What is the Economic Order Quantity? b. (3 points) How many orders are placed per year? C. (3 points) How long is the time between placing orders? d. (3 points) How much is the annual ordering cost? e. (3 points) What is the minimum inventory held? f. (3 points) What is the maximum inventory held? g. (3 points) What is the average inventory held? h. (3 points) How much is the annual inventory holding cost? Now assume lead time is 5 days. Standard deviation of (normally distributed) daily demand is 10 units. Required availability is 90%. i. (3 points) How much safety stock is needed? j. (3 points) What should the reorder point be?

Answer rating: 100% (QA)

To solve this problem well use the Economic Order Quantity EOQ model and the formulae associated with it Lets calculate the values step by step a What is the Economic Order ... View the full answer