# C11 - PROBLEMS 1 Suppose that the R& B Beverage Company...

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Unformatted text preview: PROBLEMS 1. Suppose that the R & B Beverage Company has a soft drink product that shows a =:If-- stant annual demand rate of 3600 cases. A case of the soft drink costs R & B \$3. Ort:r- ing costs are \$20 per order and holding costs are 25% of the value of the inventory. R.. ! has 250 working days per year, and the lead time is 5 days. Identify the following a5p:--= of the inventory policy. a. Economic order quantity b. Reorder point PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com PDF processed with CutePDF evaluation edition www.CutePDF.com Chapter 11 Inventory Models 533 c. Cycle time d. Total annual cost 2. A general property of the EOQ inventory model is that total inventory holding and total or- dering costs are equal at the optimal solution. Use the data in Problem I to show that this result is true. Use equations (ll.l), (11.2), and (11.3) to show that, in general, total hold- ing costs and total ordering costs are equal whenever Q* is used. 3. The reorder point [see equation (11.6)] is defined as the lead-time demand for an item. In cases of long lead times, the lead-time demand and thus the reorder point may exceed the economic order quantity Q*. In such cases, the inventory position will not equal the inventory on hand when an order is placed, and the reorder point may be expressed in terms of either the inventory position or the inventory on hand. Consider the economic order quantity model with D = 5000, Co = \$32, Ch = \$2, and 250 working days per year.Identify the reorder point in terms of the in- ventory position and in terms of the inventory on hand for each of the following lead times. a. 5days b. 15days c. 25days d. 45 days 4. Westside Auto purchases a component used in the manufacture of automobile generators di- rectly from the supplier.Westside's generator production operation, which is operated at a con- stant rate, will require 1000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are \$25 per order, the unit cost is ~2.50 per compo- nent, and annual holding costs are 20% of the value of the inventory. Westside has 250 work- ing days per year and a lead time of 5 days. Answer the following inventory policy questions....
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C11 - PROBLEMS 1 Suppose that the R& B Beverage Company...

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