(a) Aside from holding and ordering costs, there are various other costs associated with managing inventory....

  

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(a) Aside from holding and ordering costs, there are various other costs associated with managing inventory. Discuss two of these in detail. (b) In the following sawtooth inventory profile diagram (figure 1), two inventory plans with different order quantities (Q) and different frequencies of delivery are shown; order quantity for Plan A = 200 units and Plan B = 50 units. Figure 1: Two alternative inventory plans with different order quantities (Q) Inventory level 200 Plan A 200 Plan B 500-50 Demand (D)= 350 items per year MA Time 0.1 yr 0.4 yr Total demand (D) is 350 units, the holding cost per unit (Ch) is equal to (0.8) and the ordering cost per order (Co) is (12.5). Calculate the total costs for each plan and state which one is more preferable along with the reason why. (c) (d) There is a stark difference in the composition of the total costs of Plans A and B. Explain this difference and why it occurs. Use the breakdown of costs for each plan to help illustrate your answer. Neither plan provides the economic order quantity (EOQ). Calculate two new plans (C and D) with order quantities of 150 and 100 respectively. (e) The results of your four plans will provide an indicative EOQ value. State this value and discuss in a precise manner, why it is not the exact, true value. Your answer should include reference to the salient points identified on the graph which was used in the lecture and seminar, to map out holding costs, order costs and total costs: (NOT figure 1). You may find sketching this graph using the data from your plans will assist you in the process of answering the question but you DO NOT need to submit the graph as part of your answer. Additional calculations in the form of plans E, F etc. may also assist your explanation of the EOQ and can be included in your answer if you deem this helpful. (a) Aside from holding and ordering costs, there are various other costs associated with managing inventory. Discuss two of these in detail. (b) In the following sawtooth inventory profile diagram (figure 1), two inventory plans with different order quantities (Q) and different frequencies of delivery are shown; order quantity for Plan A = 200 units and Plan B = 50 units. Figure 1: Two alternative inventory plans with different order quantities (Q) Inventory level 200 Plan A 200 Plan B 500-50 Demand (D)= 350 items per year MA Time 0.1 yr 0.4 yr Total demand (D) is 350 units, the holding cost per unit (Ch) is equal to (0.8) and the ordering cost per order (Co) is (12.5). Calculate the total costs for each plan and state which one is more preferable along with the reason why. (c) (d) There is a stark difference in the composition of the total costs of Plans A and B. Explain this difference and why it occurs. Use the breakdown of costs for each plan to help illustrate your answer. Neither plan provides the economic order quantity (EOQ). Calculate two new plans (C and D) with order quantities of 150 and 100 respectively. (e) The results of your four plans will provide an indicative EOQ value. State this value and discuss in a precise manner, why it is not the exact, true value. Your answer should include reference to the salient points identified on the graph which was used in the lecture and seminar, to map out holding costs, order costs and total costs: (NOT figure 1). You may find sketching this graph using the data from your plans will assist you in the process of answering the question but you DO NOT need to submit the graph as part of your answer. Additional calculations in the form of plans E, F etc. may also assist your explanation of the EOQ and can be included in your answer if you deem this helpful.

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The question youve presented includes two parts from a larger problem regarding inventory management specifically focused on calculating costs for different inventory plans and discussing the Economic ... View the full answer