Chapter 10 Assignment

Complete inventory problems attached in the document. Complete questions using inventory formulas to find the solutions. Afterwards, use an excel spreadsheet to find the same answers.

1. An office supply store open 5 days a week must determine the best inventory policy for boxes of copier paper. Weekly demand is nearly constant at 250 boxes and when orders are placed, then entire shipment arrives at once. The cost per box is $22 and the inventory holding cost is 30%. Orders are placed at a cost of $40 each, including preparation time and communication charges, and the lead time is 2 days.

1. Find the optimal order quantity. (1.75 points)

2. What is annual holding Cost? (0.75 point)

3. What is the annual ordering cost (0.75 point)

4. What is the re-order point? (0.75 point)

5. What is the cycle time? (0.75 point)

6. Use a spreadsheet to find the above solutions. (3.5 points)

2. Cress Electronic Products, which operates 250 days per year, manufactures components used in the automotive industry. Cress purchases parts for use in its manufacturing operation from a variety of different suppliers. One particular supplier provides a part where the assumptions of the EOQ model are realistic. The annual demand is 5000 units, the ordering cost is $80 per order, and the annual holding cost is 25%. The cost of the part is $20 per unit and the lead time for an order is 12 days.

1. Find the optimal order quantity. (1.75 points)

2. What is annual holding Cost? (0.75 point)

3. What is the annual ordering cost (0.75 point)

4. What is the re-order point? (0.75 point)

5. What is the cycle time? (0.75 point)

6. Use a spreadsheet to find the above solutions. (3.5 points)

3. The A&M Hobby Shop carries a line of radio-controlled model racing cars and operates 300 days per year. Demand for the cars is assumed to be constant at a rate of 40 cars per month. The cars cost $6 each and ordering costs are approximately $15 per order. The annual holding cost rate is 20% and the lead time is 6 days.

1. Find the optimal order quantity. (2 points)

2. What is annual holding Cost? (0.75 point)

3. What is the annual ordering cost (0.75 point)

4. What is the re-order point? (0.75 point)

5. What is the cycle time? (0.75 point)

6. Use a spreadsheet to find the above solutions. (3.5 points)