Complete Problems 8 (for part a only – find reorder quantity and reorder point only), 12, 15 (part a only), and 28 at the end of chapter 17 in the textbook.
8
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 areused at a relatively constant rate and are ordered whenever the remaining quantity drops to thereorder level. Widgets are ordered from a supplier who stops by every three weeks. Data forboth products are as follows:
- What is the inventory control system for Tegdiws? That is, what is the reorder quantity and what is the reorder point?
12 Item X is a standard item stocked in a company’s inventory of component parts. Each year the firm, on a random basis, uses about 2,000 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of average inventory. Every time anorder is placed for more item X, it costs $10.
- Whenever item X is ordered, what should the order size be?
15
Gentle Ben’s Bar and Restaurant uses 5,000 quart bottles of an imported wine each year. The effervescent wine costs $3 per bottle and is served only in whole bottles because it loses itsbubbles quickly. Ben figures that it costs $10 each time an order is placed, and holding costsare 20 percent of the purchase price. It takes three weeks for an order to arrive. Weekly demandis 100 bottles (closed two weeks per year) with a standard deviation of 30 bottles.Ben would like to use an inventory system that minimizes inventory cost and will provide a 95 percent service probability.
- What is the economic quantity for Ben to order?
28 A local service station is open 7 days per week, 365 days per year. Sales of 10W40 grade premiumoil average 20 cans per day. Inventory holding costs are $0.50 per can per year. Orderingcosts are $10 per order. Lead time is two weeks. Backorders are not practical—the motoristdrives away.
a.
Based on these data, choose the appropriate inventory model and calculate the economicorder quantity and reorder point. Describe in a sentence how the plan would work. Hint:
Assume demand is deterministic.
b.
The boss is concerned about this model because demand really varies. The standard deviationof demand was determined from a data sample to be 6.15 cans per day. The managerwants a 99.5 percent service probability. Determine a new inventory plan based on thisinformation and the data in a . Use Qopt from a.