Question: A manager must set up inventory ordering systems for two new items, Gadget and Widget. Gadget is ordered from a supplier and is delivered at
A manager must set up inventory ordering systems for two new items, Gadget and Widget. Gadget is ordered from a supplier and is delivered at once, while Widget is produced inhouse in batches of fixed size. The company operates weeks a year and demand for each item is normally distributed. The company uses a continuous inventory system. The manager has gathered the following information about the items. GadgetWidgetAverage demand units per year units per weekStandard deviation units per week units per dayUnit cost C$$Production rate pt units per dayOrdering costSetup cost Co$$Annual carrying cost CcLead time Lt weeks weekService level a Compute the optimal order quantity for item Gadget.b How many orders of item Gadget will be placed per year?c What should the safety stock be for item Gadget?d Compute the optimal order quantity for Widget.e When should the manager reorder item Widget?f Determine the length of each production run of item Widget, in days.g What is the time between two consecutive orders of Widget, in weeks?
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
