An item stocked by a Cameco plant is acable hanger.  Its purchase price is $3 per unit, FOB the plant site.  Purchase (delivery) lead-time from the distributor is 7 days. The monthly usage last year are shown below.

a. Assuming holding cost rate of 10% per year and ordering costs of $15 per order, calculate the EOQ, rounded to the nearest 25 units (bec. this item is sold in boxes of 25 units).

b. Calculate the total annual inventory holding and ordering cost for the EOQ you found in Part a.

c. The desired safety stocks is approx. equal to avg. monthly demand.  Calculate the ROP.

d. Suppose instead of (EOQ, ROP) model, Fixed Interval model is use stock order interval OI is 3months and desired safety stocks is approx. 3 times avg. monthly demand, calculate the I_max.

Transcribed Image Text:

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Cable Hanger 0 150 75 100 0 0 100 75 0 0 0 0 500 Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Cable Hanger 0 150 75 100 0 0 100 75 0 0 0 0 500

Answer rating: 100% (QA)

a Mean monthly demand 50012 4166 EOQ 2 x annual demand x cost per order cost of holding on... View the full answer