Module Problems

4-1 Ross Whites machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $19 each, and the lead time is 4 days. The holding cost per bracket per year is 10% of the unit cost and the ordering cost per order is $25. There are 250 working days per year.

What is the EOQ?

Given the EOQ, what is the average inventory?

What is the annual inventory holding cost?

In minimizing cost, how many orders would be made each year?

What would be the annual ordering cost?

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

What is the time between orders?

What is the ROP?

4-2 Douglas Boats is a supplier of boating equipment for the states of Oregon and Washington. It sells 5,000 White Marine WM-4 diesel engines every year. These engines are shipped to Douglas in a shipping container of 100 cubic feet, and Douglas Boats keeps the warehouse full of these WM-4 motors. The warehouse can hold 5,000 cubic feet of boating supplies. Douglas estimates that the ordering cost is $50 per order, and the carrying cost is estimated to be $50 per motor per year. Douglas Boats is considering the possibility of expanding the warehouse for the WM-4 motors.

How much should Douglas Boats expand.

How much would it be worth for the company to make the expansion? Assume demand is constant throughout the year.