Question: Your company manufactures approximately 16,000 RV motor homes a year, and sells them for prices between
Question:
Question:
Your company manufactures approximately 16,000 RV motor homes a year, and sells them for
prices between $35,000 and $220,000. You are responsible for maintaining the inventory for the
required tires to meet this demand. You know that your normal weekly demand for tires is
approximately 1500, with a standard deviation of 570 tires a week. Because of the high value of
the finished product, your company has a standard for its inventory of having a 97% chance of
having stock in inventory between orders. Failure to have the tires through normal channels will
cost the company $200 per tire to expedite them to the factory in 0.5 weeks. The tires cost $125
each, FOB at the tire factory in Akron, Ohio. The normal transportation cost is $12 each from
Akron to your factory. From the time of making the order to when the tires are available at the
factory, it takes 3 weeks (0.5 weeks for order processing; 2 weeks for picking and transportation;
and 0.5 weeks for moving from receiving to the assembly line). You have determined that your
inventory carrying cost is approximately 25 percent and it costs you $80 to make an order.
Assume 52 weeks a year in your analysis
What is the Reorder Point strategy using the following data. Use both EOQ and DDLT for your
order size. State your two plans (based upon EOQ and DDLT) as well as its total service level
(fill rate) and yearly cost. What is your recommended plan?
what is the Periodic Review strategy using the following data. Use both EOQ and DDLT for your
order size. State your two plans (based upon EOQ and DDLT) as well as its total service level
(fill rate) and yearly cost. What is your recommended plan?
Operations Management in the Supply Chain Decisions and Cases
ISBN: 978-0073525242
6th edition
Authors: Roger Schroeder, M. Johnny Rungtusanatham, Susan Goldstein