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  • Inventory Model Activity

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    Ira Grace De Castro
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    The document summarizes an inventory model activity for R&B Beverage Company. It calculates: 1) The economic order quantity of 438 cases based on the annual demand, ordering costs, and holding costs. 2) The reorder point of 72 cases based on the daily demand and lead time. 3) The cycle time of 30 days based on the order quantity, annual demand, and working days. 4) The total annual cost of $328.63 based on the order quantity, holding costs, and ordering costs.

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    The document summarizes an inventory model activity for R&B Beverage Company. It calculates: 1) The economic order quantity of 438 cases based on the annual demand, ordering costs, and holding costs. 2) The reorder point of 72 cases based on the daily demand and lead time. 3) The cycle time of 30 days based on the order quantity, annual demand, and working days. 4) The total annual cost of $328.63 based on the order quantity, holding costs, and ordering costs.

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    © All Rights Reserved
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    778 views1 page

    Inventory Model Activity

    Uploaded by

    Ira Grace De Castro
    The document summarizes an inventory model activity for R&B Beverage Company. It calculates: 1) The economic order quantity of 438 cases based on the annual demand, ordering costs, and holding costs. 2) The reorder point of 72 cases based on the daily demand and lead time. 3) The cycle time of 30 days based on the order quantity, annual demand, and working days. 4) The total annual cost of $328.63 based on the order quantity, holding costs, and ordering costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 1

    Ira Grace B. De Castro.

    ACN1 | CAED101

    INVENTORY MODEL ACTIVITY


    Suppose that the R&B Beverage Company has a soft drink product that shows a constant annual demand
    rate of 3600 cases. A case of the soft drink costs R&B $3. Ordering costs are $20 per order and holding
    costs are 25% of the value of the inventory. R&B has 250 working days per year, and the lead time is 5
    days. Identify the following aspects of the inventory policy:

    a. Economic order quantity


    2𝐷𝐶𝑜
    Q*=√
    𝐶ℎ

    2(3600)(20)
    =√
    (0.25)(3)
    = 438.18

    b. Reorder point
    r = dm
    3600
    = (5)
    250
    = 72

    c. Cycle time
    250Q∗
    T=
    𝐷
    250(438.18)
    =
    3600
    = 30.43 days

    d. Total annual cost


    1 𝐷
    TC = 𝑄𝐶ℎ + 𝐶
    2 𝑄 𝑜
    1 3600
    = (438.18)(0.25)(3) + (20)s
    2 438.18
    = $328.63

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