Revised March 2011
Chapter 10 Assignments:
Problem 1
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
b. Reorder point
c. Cycle time
d. Total annual cost
Problem 2
A general property of the EOQ inventory model is that total inventory holding and total
ordering costs are equal at the optimal solution. Use the data in Problem 1 to show
that this result is true. Use proper formulas to show that, in general, total holding costs
and total ordering costs are equal whenever
Q
* is used.
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 Spring '11
 abc
 Normal Distribution, order quantity Reorder

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