Homework $4$ Inventory Control

$$

Problem $1$:

$$

Dr$.$ Gold$$s lumber yard uses $15,000$ sheets of plywood during a year, with demand relatively constant during the year.$$ These plywood is are purchased from a tree$-$cutting and milling company$$ at a cost of $$35$ each, and the lead time to get his deliveries is $5$ days. The holding cost per sheet of plywood per year is $$3\mathrm{.}50($or $10\%$ of the unit cost$),$ and the ordering cost per order is $$12\mathrm{.}75.$ There are $300$ working days per year.

$$

a$)$ What is the EOQ?

$$

b$)$ Given the EOQ, what is the average inventory? What is the annual inventory holding cost?

$$

c$)$ In minimizing cost, how many orders would be placed each year? What would be the annual ordering cost?

$$

d$)$ Given the EOQ, what is the total annual inventory cost $($including purchase cost$)?$

$$

e$)$ What is the time between orders?

$$

f$)$ What is the ROP?

$$

$$

Problem $2$:

$$

Dr$.$ Gold sells dive packages that includes all the equipment necessary for someone to go scuba diving.$$ Annual demand for Dr$.$ Gold$$s dive packages kit is $100,000$ units. Dr$.$ Gold, president of Dr$.$ Gold$$s Scuba estimates that the ordering cost, is $$10$ per order. The carrying cost, is $$5$ per package per year. It takes $15$ days from the time that Dr$.$ Gold places an order for the gear until they are received at the warehouse. During this time, the daily demand is estimated to be $250$ units.$$ There are $300$ working days per year.

$$

a$)$ What is the EOQ?

$$

b$)$ Given the EOQ, what is the average inventory? What is the annual inventory holding cost?

$$

c$)$ In minimizing cost, how many orders would be placed each year? What would be the annual ordering cost?

$$

d$)$ Given the EOQ, what is the total annual inventory cost $($including purchase cost$)?$

$$

e$)$ What is the time between orders?

$$

f$)$ What is the ROP?

$$

a$)$ Dr$.$ Gold now believes that the carrying cost may be as high as $$14$ per unit per year. Furthermore, Dr$.$ Gold estimates that the lead time may be $25$ days instead of $15$ days. Redo part $($a$),$ using these revised estimates.