Question: A manager must set up inventory ordering systems for two new production items, item X and item Y. Item X can be ordered at any

A manager must set up inventory ordering systems for two new production items, item X and item Y. Item X can be ordered at any time, but item Y can be ordered only once every four weeks. The company operates 50 weeks a year and the weekly usage rates for both items are normally distributed. The manager has gathered the following information about the items

Item x

Item y

Average weekly demand

60 units

70 units

Standard deviation

4 units per week

5 units per weeks

Unit cost

RM 15

RM20

Annual holding cost

30%

30%

Ordering cost

RM 70

RM 30

Lead time

2 weeks

2 weeks

Acceptable stockout risk

2.5%

2.52%

- When should the manager reorder item X?

- When should the manager reorder item Y?

- Calculate the total inventory cost for item X

- Compute the order quantity for item Y if 110 units are on hand at the time the order is placed

- Calculate the total inventory cost for item Y

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