= = Question #4 - 15 marks A Company uses an (s system to control inventory of a fast-moving item. The relevant information about the item is: D = Expected annual demand = 1920 units/year Average monthly demand = 1920/12 = 160 units/month A $80/order p=0.36 $/$/year or r;= .03 $/$/month purchase cost = $5/unit L Lead time = 4 months Std. deviation of monthly demand = 30 units Assume that the fill rate (i.e., P.) for the item is specified to be 98%. 9 marks a) Suppose Q = EOQ. Determine EOQ and s, the reorder point. Assume that demand in each month is normally distributed and is independent of demand in any other month. Also, there is complete backordering, i.e., any demand that occurs during a stock out condition is backordered and filled when new supply becomes available. = = = Question #4 - Continued 3 continued... 6 marks b) What is the expected cycle time? 11) How many scheduled receipts are there when you place a new order? 111) What is the average net stock when you place a new order