The EOQ provides a model for calculating the appropriate reorder point and the optimal reorder quantity to ensure the instantaneous replenishment of inventory with no shortages. TRUE OR FALSE
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The EOQ provides a model for calculating the appropriate reorder point and the optimal reorder quantity to ensure the instantaneous replenishment of inventory with no shortages. TRUE OR FALSE
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- This is a 2-part question scenario based on EOQ and Reorder Point: You have been selling your best selling TV at a rate of 44 per day with a standard deviation of 5. Average lead time for the this model of TV is 6 days with a standard deviation of 2 days. At what inventory level do you order to ensure a 95% service level? You have been selling the tires at a rate of 78 per day with a standard deviation of 3. Average lead time for the bicycle tires you need is 83 days. At what inventory level do you order to ensure a 90% service level?In a two-bin inventory system, the demand for three-inch lag bolts during the 2-week lead time is normally distributed, with an average of 53 units per week. The standard deviation of weekly demand is 5 units. a. What is the probability of demand exceeding the reorder point when the normal level in the second bin is set at 130 units? b. What is the probability of demand exceeding the 130 units in the second bin if it takes 3 weeks to receive a replenishment order?Company ABC utilizes an inventory system in which order gets placed after uniform time duration. Which of the following represents the inventory policy used by the Company? a) (0, x) Model b) EOQ Model c) Fixed period model d) Fixed quantity model
- The basic EOQ model is based on all the following assumptions except: * Estimates of ordering and carrying costs are accurate. Order is instantaneously received exactly when previous inventory has just been used up. Annual demand is known and constant. The item is always available when needed.Palin’s Muffler Shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system to manage inventory of this standard muffler. Use the information in the following table to determine the optimal inventory target level (or order-up-to level). Annual demand 2,750 mufflers Ordering cost $ 35 per order Standard deviation of daily demand 6 mufflers per working day Service probability 76 % Item cost $ 28.00 per muffler Lead time 4 working days Annual holding cost 22 % of item value Working days 275 per year Review period 21 working days a. What is the optimal target level (order-up-to level)? If the service probability requirement is 93 percent, the optimal target level will: Increase Decrease Stay the sameThe Universal Computer Company uses a newly developed A1 chip in the manufacturer of their tablet computers. The estimated annual demand for this chip is 12,000 units. It is estimated that the cost to place an order is $75, and the holding cost for each chip is $20 per year. The company operates 320 days per year. a. What is the economic order quantity for the A1 chip? b. What is the total cost if the Universal Computer Company orders using the EOQ quantity?
- The campus bookstore sells 4,000 sets of graduation regalia each year. Placing an order from their supplier costs $25 regardless of order quantity, so they usually place a large order (a half year's supply) at a time. It costs $5 per year to hold a cap and gown in inventory, primarily insurance costs for the highly flammable material. What is their optimal order quantity, total cost using the optimal order quantity, and What is the difference in the total cost if they order at their optimal order quantity compared to their current policy?ABC Inc. operates 360 uaya per ycar onu uscaaruuel to make inventory decisions about plastic pellets used in the injection molding equipment that makes the cell phone cases. Daily demand has been forecast to be 600 units with a standard deviation of 300 units. The order interval is 30 days and order lead time is 19 days. ABC Inc. currently uses a safety stock level of 2500 units for plastic pellets. What percentage is the approximate service level for this inventory item?Jill's Job Shop buys two parts (Tegdiws and Widgets) for use in its production system from two different suppliers. The parts are needed throughout the entire 52-week year. Tegdiws are used at a relatively constant rate and are ordered whenever the remaining quantity drops to the reorder level. Widgets are ordered from a supplier who stops by every two weeks. Data for both products are as follows: ITEM TEGDIW WIDGET Annual demand 7,000 10,000 Holding cost (% of item cost) 30 % 30 % Setup or order cost $ 190.00 $ 10.00 Lead time 7 weeks 2 week Safety stock 45 units 9 units Item cost $ 5 $ 6 a. What is the reorder quantity and reorder point for Tegdiws? (Round your answers to the nearest whole number.) b. What is the inventory control system for Widgets? (Round your answer to the nearest whole number.) Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer…
- BIKO is a bike retailer located in the outskirts of Paris. BIKO purchases bikes from PMX in orders of 250 bikes which is the current economic order quantity. PMX is now offering the following bulk discounts to its customers: 2% discount on orders above 200 units 4% discount on orders above 500 units 6% discount on orders above 600 units BIKO is wondering if the EOQ model is still the most economical and whether increasing the order size would actually be more beneficial. Following information is relevant to forming the decision: Annual demand is 5000 units Ordering cost is $100 per order Annual holding cost is comprised of the following: 5% insurance premium for the average inventory held during the year calculated using the net purchase price Warehousing cost of $6 per unit Purchase price is $200 per unit before discount (Hint: We need to compare the total inventory cost of the order quantities at the various discount levels with that of the economic order quantity)The Cove at UP recently hired Ray Bones as the new inventory replenishment manager. Ray is a recent Accounting graduate from the University of Portland and learned all about managing inventory in BUS 457. Ray needs to determine the length-of the build up and sell thru periods associated with an optimal ordering policy for an item with constant annual demand of 2200 units, unit cost $3790.5, annual unit holding cost percentage 0.28, and aggregate order placement cost $425 for an item with a production rate of 3820 (units/year). What are the cost minimizing order quantity and build up and sell thru periods? (specify answer as a whole number) (specify answer to 3 decimal places). (specify answer to 3 decimal places).The amount of denim used daily by the Western Jeans Company in its manufacturing process to make jeans is normally distributed, with an average of 3,000 yards of denim and a standard deviation of 600 yards. The lead time required to receive an order of denim from the textile mill is a constant 6 days. Determine the safety stock and reorder point if the Western Jeans Company wants to limit the probability of a stockout and work stoppage to 5%.