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Tusmingmob
Tusmingmob
chain with a central inventory operation. Thomas’s fastest moving inventory item has a demand
of 6,000 units per year. The cost of each unit is $100, and the inventory carrying cost is $10 per
unit per year. The average ordering cost is $30 per order. It takes about 5 days for an order to
arrive, and the demand for 1 week is 120 units. (This is a corporate operation, and there are 250
working days per year.)
a) What is the EOQ?
2 DS
EOQ=
√ H
2(6000)(30)
EOQ=
√ 10
=√36000 = 189.74 190 units
f) What is the total annual inventory cost, including the cost of the 6,000 units?
= $1897.37 + 6000(100) = $601,897.37
Lead time for one of your fastest- moving products is 21 days. Demand during this period
averages 100 units per day.
a) What would be an appropriate reorder point?
Reorder = Avg. daily use * lead time
Reorder point = 100*21
Reorder point is 2100 units
b) How does your answer change if demand during lead time doubles?
Reorder point = 200*21
Reorder point is 4200 units
c) How does your answer change if demand during lead time drops in half?
Reorder point = 50*21
Reorder point is 1050 units
12.27 Barbara Flynn is in charge of maintaining hospital supplies at General Hospital. During the
past year, the mean lead time demand for bandage BX- 5 was 60 (and was normally distributed).
Furthermore, the standard deviation for BX- 5 was 7. Ms. Flynn would like to maintain a 90%
service level.
a) What safety stock level do you recommend for BX- 5?
Lead time = 60 Standard dev = 7
90% service level = 7*[60(at 0.90)] = 7*1.28 = 8.96 = 9
b) What is the appropriate reorder point?
Reorder point = 60+9 = 69 bandages
Chicago’s Hard Rock Hotel distributes a mean of 1,000 bath towels per day to guests at the pool
and in their rooms. This demand is normally distributed with a standard deviation of 100 towels
per day, based on occupancy. The laundry firm that has the linens contract requires a 2- day lead
time. The hotel expects a 98% service level to satisfy high guest expectations.
a) What is the safety stock?
= Z∗σ dLT = 2.05*141.42 = 289.91 290 is the safety stock
b) What is the ROP?
ROP = (average daily demand * lead time in days) + zσdLT
2 D∗S 2(12500)∗30
EPQ=
√ d
H∗[ 1− ]
p
=
√2∗[1−
50
300
]
= √ 450000=670.8 671 EPQ
D 12500
= Q
=
671 = 18.6 19 runs
S
hould the discount be taken?
Without Discount: