1. HEB has started selling a new brand of Monster Energy Drink: Monster MIXXD. Because this...

 

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1. HEB has started selling a new brand of Monster Energy Drink: Monster MIXXD. Because this energy drink is new to the product line, HEB has been ordering the product in large bulk quantities so that they can deal with any demand they might face for this product. Now that the product has been around for a while, HEB is starting to take a more active role in managing the inventory for the product. Using the following table, please answer the questions below. (Total 15 Points) Variable Demand Lead Time Holding Cost Ordering Cost Price Operating Days Mean 500 cans per week 3 days 20% of item value per unit per year $2.50 per order $0.20 per can 365 days per year a. What is the Economic Order Quantity in this scenario? (2 Points) b. If demand and lead time are constant, please find the number of orders, the expected time between orders, the reorder point, and the cost of managing inventory for the EOQ. (5 Points) c. Using a service level of 95%, If the variance of daily demand is 15 cans per day and the variance of lead time is 1 day, what should the reorder point be for this product? (3 Points) d. Say that the manager of HEB does not want to order the amount specified in the Economic Order Quantity, and instead decides to order 5,000 units every time they place and order. In this scenario, please find the expected time between orders, the reorder point (with constant demand and lead time, same as part B), and the cost of managing inventory. Which cost is higher than in part B: total holding costs or total ordering costs? Why do you think this is the case? (5 Points) 1. HEB has started selling a new brand of Monster Energy Drink: Monster MIXXD. Because this energy drink is new to the product line, HEB has been ordering the product in large bulk quantities so that they can deal with any demand they might face for this product. Now that the product has been around for a while, HEB is starting to take a more active role in managing the inventory for the product. Using the following table, please answer the questions below. (Total 15 Points) Variable Demand Lead Time Holding Cost Ordering Cost Price Operating Days Mean 500 cans per week 3 days 20% of item value per unit per year $2.50 per order $0.20 per can 365 days per year a. What is the Economic Order Quantity in this scenario? (2 Points) b. If demand and lead time are constant, please find the number of orders, the expected time between orders, the reorder point, and the cost of managing inventory for the EOQ. (5 Points) c. Using a service level of 95%, If the variance of daily demand is 15 cans per day and the variance of lead time is 1 day, what should the reorder point be for this product? (3 Points) d. Say that the manager of HEB does not want to order the amount specified in the Economic Order Quantity, and instead decides to order 5,000 units every time they place and order. In this scenario, please find the expected time between orders, the reorder point (with constant demand and lead time, same as part B), and the cost of managing inventory. Which cost is higher than in part B: total holding costs or total ordering costs? Why do you think this is the case? (5 Points)