Calculate the Economic Order Quantity (EOQ) for the following scenario: Procurement Process Cost: $1,000 Daily Demand: 48
Question:
- Calculate the Economic Order Quantity (EOQ) for the following scenario:
Procurement Process Cost: $1,000
Daily Demand: 48 units
Inventory Holding Cost: $35/year
- A. Calculate the Economic Order Quantity (EOQ) for the following scenario:
Procurement Process Cost: $500
Daily Demand: (units) Calculate from the data table provided
Total Inventory Holding Cost: $25/year
B.1. If you wait until you reach zero (or below) as your reorder point, how many times do you stock-out during the year? (Assume you instantaneously restock)
B.2. What are your annual holding costs?
C. Given the lead times below, along with 95% reliability of stock on-hand, calculate your Safety Stock (SS) and Reorder Point (R).
- Procurement Leadtime (PLT) – 1 day
- Manufacturer Leadtime (MLT) – 7 days
- Shipping/Transportation Leadtime (SLT) – 5 days
D. Run your new order model and answer the following questions:
1. Do you experience a stock-out?
2. What is the observed lowest on-hand quantity?
3. What are your new annual holding costs?
Essentials of Business Analytics
ISBN: 978-1285187273
1st edition
Authors: Jeffrey Camm, James Cochran, Michael Fry, Jeffrey Ohlmann , David Anderson, Dennis Sweeney, Thomas Williams