Inventory_In-Class_Problems

Inventory_In-Class_Problems - 5. Lead-time demand for a...

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Inventory Problems Prof. Uday 1. A product has a constant demand of 2000 units/year. It costs $20 to place an order. The inventory holding cost is 20% per year. The item costs $10/unit. a. Find the EOQ. b. What is the total cost/year? c. How many orders are placed per year? d. Find the cycle time (time between orders). Assume 360 days/year. 2. Refer to the above problem. Suppose the lead-time is 9 days. Find the reorder level. What is the reorder level if the lead-time is 45 days? 3. Demand for a product occurs at a constant rate of 24,000 units/year. The production rate is 72,000 units/year. The setup cost is $800, while the inventory carrying cost is $10/unit/year. Assume 360 days/year. a. Find the optimal batch size. b. What is the average inventory? c. Find the production run length. d. For how many days in each cycle is the equipment idle (available to make other products)? 4. Refer to problem 1 . Suppose the supplier offers a discount of 2% if the order quantity is at least 500 units. What is the best order quantity?
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Unformatted text preview: 5. Lead-time demand for a product is uncertain, and has the following probability distribution: Lead-time demand 5 10 15 20 25 30 Probability 0.05 0.1 0.3 0.35 0.15 0.05 Suppose the desired service level is 0.95. a. Find the reorder level and safety stock. b. The inventory holding cost is $50/unit/year. What is the annual cost of carrying the safety stock? 6. Lead-time demand for a product has a normal probability distribution with a mean of 200 units and a standard deviation of 20 units. Find the reorder level and safety stock, if the desired service level is 95%. 7. The periodic review inventory system is used for a product whose weekly demand is normally distributed with a mean of 1200 units and a standard deviation of 200 units. The review period is 4 weeks, while the lead-time is 1 week. The desired service level is 0.95. a. Find the target inventory. b. At a review point, the inventory position is found to be 619 units. What is the order quantity?...
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