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Inventory management

Please see the attached file for the fully formatted problems.

A timber company in the southwest is evaluating its inventory policy regarding timber needed for its saw mill. Annual demand= 38,000, Carrying cost = $6.10, ordering cost = $25.00, supply rate = 200, usage rate = 75. a) What is EOQ
b) What is total annual stocking cost?
c) What is their peak inventory?

The owner of a miniature golf course is trying to determine the number of golf balls they should order at on time for their booming business. 8000 boxes of balls are needed each year. It costs them 20% of the cost per box to carry one box in inventory for one year. The cost of placing an order is $3.00. Quantity discount pricing is offered according to the following; Quantity 0-150 cost = $3.00 per box, quantity 151-300 cost = $2.75 per box, quantity 301+ cost = $2.60 per box. a) what quantities should be investigated for TMC b) what is the total acquisition costs (TMC) for all quantities investigated c) based in the TMC's calculated, what is the best order quantity?

The following historical demand during lead times is presented: (DDLT, Number of occurrences); (3,2), (4,5), (5,6), (6,9), (7,11), (8,7), (9,4), (10,2), (11,1), (12,1) a) compute the order point( this is a discrete distribution)? Use a service level of 90% b) compute the expected demand during lead time? c) what is the effective level of safety stock resulting from this order point?

IF EDDLT = 70.5 units, with std. dev. of 9.5, DDLT is normally distributed, and service level is 95 percent: a) what is the order point? b) What is the safety stock level?


Solution Summary

Excel file contains calculations of economic order quantity, total annual stocking cost, peak inventory, order point and safety stock level