Jill's Job Shop buys two parts (Tegdiws and Widgets) for use in its production system from two different suppliers. The parts are needed throughout the entire 52-week year. Tegdiws are used at a relatively constant rate and are ordered whenever the remaining quantity drops to the reorder level. Widgets are ordered from a supplier who stops by every three weeks. Data for both products are as follows:
ITEM TEGDIW WIDGET
Annual demand 10,000 5,000
Holding cost (% of item cost) 20% 20%
Setup or order cost $150.00 $25.00
Lead time 4 weeks 1 week
Safety stock 55 units 5 units
Item cost $10.00 $2.00
a. What is the reorder quantity and what is the reorder point?
b. What is the inventory control system for Widgets?
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