#$12-$ Inventory Management$-$ Class Exercise

Part A:

Woodbox Inc. buys $5000$ boxes per year. The cost of a box is $$800$ and the annual holding cost is $15\%$ of the cost.

Admin$/$paper$/$communication and other costs, required to execute an order are $$50$ per order.

a$)$ How many boxes $?)$ should Woodbox order at a time?

Hint:

$D=$ Total annual demand

$S=$ Order or setup cost $=$

$H=$ Annual storage cost in $$/$unit $=$

b$)$ How many times per year should the company order?

c$)$ What is the demand of wood boxes per day $($There are $250$ working days$/$year$)?$

d$)$ If the lead time for boxes from the supplier is $3$ day, what is the re$-$order point?

e$)$ Calculate the following:

Holding cost for the whole year

Ordering cost for the whole year

Total inventory cost for the whole year. $$ #$12-$ Inventory Management$-$ Class Exercise$-$ Part B

Uncertainty of Demand

Based on the information in Slide $30,$ answer the following questions: