Consider an inventory system with 4 items: Item i (units/year) Ci 2.00 0.90 5.00 0.81 1...

 

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Consider an inventory system with 4 items: Item i (units/year) Ci 2.00 0.90 5.00 0.81 1 2 3 4 7,200 4,000 500 2,500 The inventory manager argues that there is no way that he can evaluate K and i; however, he admits that K/i is reasonably constant across the items, which he assumes to be 500. He has been following a 'power-of-two' policy for each item, where the base-period is a month. a) Characterize the policy followed by the manager. b) What K/i value gives the same average cycle stock (in dollars) under EOQ as the current rule? c) What K/i value gives the same N under EOQ as the current rule? Consider an inventory system with 4 items: Item i (units/year) Ci 2.00 0.90 5.00 0.81 1 2 3 4 7,200 4,000 500 2,500 The inventory manager argues that there is no way that he can evaluate K and i; however, he admits that K/i is reasonably constant across the items, which he assumes to be 500. He has been following a 'power-of-two' policy for each item, where the base-period is a month. a) Characterize the policy followed by the manager. b) What K/i value gives the same average cycle stock (in dollars) under EOQ as the current rule? c) What K/i value gives the same N under EOQ as the current rule?

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a The manager is following a poweroftwo policy for each item where the baseperiod is a month T... View the full answer