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Inventory_Management_Assignment_Chapter_6

Inventory_Management_Assignment_Chapter_6 - stock enough...

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Exercise (2)-Individual Chapter 6: Inventory Management A major outlet of Hyper Panda Stores sells 200 unites daily of breakfast cereals. You have been hired as a SCM consultant to design an inventory system for this cereal. Hyper Panda records show the following useful data: The annual holding cost is SR 4 per pack . Each time the outlet manager receives a new shipment , he changes the display at a cost of SR40 per setup. The cereal is produced by a major MNC that requires at least 12 days to deliver the shipment upon receiving the purchase order from Hyper Panda. The store manager wishes to keep a minimum safety
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Unformatted text preview: stock enough for double the shipment time needed by the supplier How would you advise the store manager of the best inventory management system? Hint: – The basic criteria for an efficient inventory management system are: • Economic Order Quantity • Optimal Reorder Point – Those criteria secure the most cost effective SCM in light of the above data. Solution - The basic Economic Order Quantity (EOQ) formula is as follows: Annual demand =annual usage = 200 x365=73000 units Setup cost = order cost = SR 40 Holding cost=carrying cost =SR 4 EOQ= 2x73000x404 =1208 units-reorder point = d * l =...
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