Question: Design a reorder point system and economic order quantity for the product with following information. Weekly demand for a product is 250 units. The cost

Design a reorder point system and economic order quantity for the product with following information. Weekly demand for a product is 250 units. The cost of holding the inventory is 13 per item per year, and the setup costs to manufacture this product are estimated to be 5 per setup. The replenishment lead time averages 2 weeks and the producer aims to hold a safety stock which covers him during the entire lead time period. Find the following for this product: 1) Economic Order Quantity (EOQ) (20 Marks) EOQ = 2/ 2) Safety Stock (SS) (20 Marks)

3) Reorder Point (ROP) (20 Marks) ROP = D x L + SS

b)Explain the advantages and disadvantages of the Economic Order Quantity in the context of inventory systems.

Design a reorder point system and economic order 3

5. a) Design a reorder point system and economic order quantity for the product with following information. Weekly demand for a product is 250 units. The cost of holding the inventory is 13 per item per year, and the setup costs to manufacture this product are estimated to be 5 per setup. The replenishment lead time averages 2 weeks and the producer aims to hold a safety stock which covers him during the entire lead time period. Find the following for this product: 1) Economic Order Quantity (EOQ) (20 Marks) EOQ = 2DS/H 2) Safety Stock (SS) (20 Marks) 3) Reorder Point (ROP) (20 Marks) ROP = DxL + SS

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