HomeWork 3 - $2 per tire, and the xed ordering cost is $30...

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MEEM 6015 Supply Chain Management HW 3: Inventory Control and Management Issued: Feb. 4, 2010 Due February 11, 2010 Question 1 Choose either product A or product B to show the detailed computation of the numbers in the Table entitled “Inventory Levels” in the risk pooling example. For both products, an order from the factory costs $60 per order and holding inventory costs are $0 . 27 per unit per week. Once an order is placed, the lead time is fixed and equal to 1 week. Suppose that the service level of 97 percent is desired. All the data above are assumed to be equalized in the decentralized distribution system and the centralized one. Question 2 Suppose a Tire distributor is now trying to set inventory policies at its warehouse. Table 1 provides the historical data on the number of tires sold in each of the last 12 months. Every time an order is placed, the lead time is fixed and equal to one week and a half. The annual inventory holding cost is
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Unformatted text preview: $2 per tire, and the xed ordering cost is $30 per order. Suppose the distributor is intended to achieve a 1 service level of 98 percent. Find the reorder point, s , and the order-up-to-level, S , for the ( s,S ) inventory policy. Table 1: Historical data Month Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. Sales 350 380 420 450 400 400 458 426 410 400 395 385 Question 3 Continue with Question 2, and assume that the lead time ceases to be xed due to some reason. The variable lead time (in week) for each of the 12 months is shown in Table 2. Find again the reorder point, s , and the order-up-to-level, S , for the ( s,S ) inventory policy, in order to achieve the same service level of 98 percent. Table 2: Variable lead time Month Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. Lead time 1.3 1.4 1.6 2 1.5 1.5 2.5 1.8 1.6 1.5 1.7 1.6 2...
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HomeWork 3 - $2 per tire, and the xed ordering cost is $30...

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