# HW_15_sol - days b) The reorder point is R= D d...

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Homework- Chapter 15 – Solutions 1. Assumptions of the EOQ model Demand for the product is constant and uniform throughout the period Lead time is constant There is a fixed cost of ordering Price per unit of product is constant Inventory holding cost is based on average inventory All demand will be satisfied (no backorders are allowed) Multiple periods 2. Assumptions of newsvendor model Single period Uncertain demand We know the distribution of demand There is a unit cost of underage/overage 3. We know that : Annual Demand (D)= 3,000 units Daily Demand (D d )= 3000/365 Fixed ordering cost (S)=\$ 75 Cost per unit (C)= \$ 30 Holding cost/year/unit(H)= 0.5*30= \$15 Lead Time (L)= 14 days a) Q opt = (2DS/H) 1/2 =(2*3000*75/15) 1/2 =173 units (after rounding). Since the number of orders over the year is D/Q opt =3000/ 173 = 17 times, we need to order every 365/17= 21

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Unformatted text preview: days b) The reorder point is R= D d L=(3,000/365) 14=115 units 4. Annual Demand (D)= 520 units Fixed ordering cost (S)=\$ 1000 Holding cost/unit/year(H)= \$1200 a) Q opt = (2DS/H) 1/2 =(2*520*1000/1200) 1/2 = 29 units (after rounding) b) Number of orders over the year is D/Q opt =520 / 29 = 18 c ) We need to order every 365/18= 21.4 days d) The total annual cost is TC= (D/Q)S +(Q/2)H = (520/29)1000+ (29/2) 1200= \$ 35331 5. For L= 3 weeks, the reorder point is R= D w L=(520/52) 3= 30 units. For weekly =2 and service level = 95% we have: L 2 = 2 2 + 2 2 +2 2 =12 so L = 3.46 z = 1. 64 (for 95%) and thus R= D w L+z L = 30 + 5.6744 = 35.6744 units 6. ML= 0.49-0.29 = \$0.2 and MP= 0.69-0.49 = \$0.2 , so Pc=ML/ ML+MP= 0.5, and 1-Pc = 0.5, which means that z=0 and thus, Q= + z* = 2400 dozen cookies...
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## This note was uploaded on 09/29/2011 for the course MGT 3501 taught by Professor Chang during the Fall '10 term at Georgia Institute of Technology.

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HW_15_sol - days b) The reorder point is R= D d...

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