Question: The numbers and questions in this problem is different from the others posted on Chegg. I promise to like the answer, if its right. Thank

The numbers and questions in this problem is different from the others posted on Chegg.
I promise to like the answer, if its right. Thank you!
The numbers and questions in this problem is
3. Teck (Cominco) is a Canadian metal mining and processing company with new investments in coal and oil. The company has several warehouses in Western Canada that store thousands of parts and supplies for the machines and equipment used in its mines and operations. The stocks in the warehouses are controlled using computers in the Vancouver head office. For spare parts, the EOQ/ROP model is used. The following data is the usage of specific spare part during a nine-month period: Jan Feb Mar Apr May Jun Jul Aug Sep 2 5 10 4 12 16 4 Suppose that now is the end of September and the next reorder point is coming up. The forecast for October is 6.7 units. The part costs Teck $15/unit. Holding cost rate is 20 percent of unit cost per year. Ordering cost is $2/order (due to EDI connection with the supplier). Purchase lead time for this part is 30 days. Assume 30 days in a month. a. What should the EOQ be? (Hint: Use the forecast for October multiplied by 12 to estimate next year's demand.) b. For how many days is the EOQ enough (i.e., what is order cycle for EOQ)? c. Calculate the total annual inventory control cost of the EOQ. d. Suppose now this part is ordered seven at a time. How much more expensive is this? e. Suppose there was no variability in demand or lead time. Determine the reorder point. f. Suppose a 95 percent lead time service level is required. The standard deviation of monthly demand is 5.14 units. Determine the reorder point

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!