A golf specialty wholesaler operates 50 weeks per year. Management is trying to determine an inventory policy for its 1-irons, which have the following characteristics: Demand (D) = 2,000 units/year. Demand is normally distributed Standard deviation of weekly demand =3 units Ordering cost $40/order Annual holding cost (H) = $5/units Desired cycle-service level = 90% Lead time (L) = 4 weeks a. If the company uses a periodic review system, what should P and T be? Round P to the nearest week b. If the company uses a continuous review system, what should R be?
Osprey Sports stocks everything that a musky fisherman could want In the Great North Woods. A Particular musky hire has been very popular with local fishermen as well as those who buy lures on the Internet from Osprey Sports. The cost to place orders with the supplier is $30/order; the demand averages 4 lures per day with a standard deviation of 1 lure; and the inventory holding cost is $1.00/lure/year. The lead time form the supplier is 10 days, with a standard deviation of 3 days. It is important to maintain a 97 percent cycle-service level to properly balance service with inventory holding costs. Osprey Sports is open 350 days a year to allow the owners the opportunity to fish for muskies during the prime season. The owners want to use a continuous review inventory system for this item. a. What order quantity should be used? b. What reorder point should be used? c. What is the total annual cost for this inventory system?
Using the same information as In Problem, develop the best policies for a periodic review system. A company begins a review of ordering policies [or its continuous review system by checking the current policies for a sample of SKUs. Following are the characteristics of one item. Demand (D) =64 units/week (Assume 52 weeks per year) Ordering and setup cost IS) = $50/order Holding cost (11) = $13/unit/year Lead time (L) = 2 weeks Standard deviation of uvsk1y demand 12 units Cycle-service level = 88 percent a. What value of P gives the same approximate number of orders per year as the EOQ? Round to the nearest week b. What safety stock and target inventory level provide an 88 percent cycle-service level?
A company begins a review of ordering policies [or its continuous review system by checking the current policies for a sample of SKUs. Following are the characteristics of one item. Demand (D) =64 units/week (Assume 52 weeks per year) Ordering and setup cost IS) = $50/order Holding cost (11) = $13/unit/year Lead time (L) = 2 weeks Standard deviation of uvsk1y demand = 12 units Cycle-service level = 88 percent a. What Is the EOQ for this item? b. What is the desired safety stock? c. What is the reorder point? d. What are the cost implications if the current policy for this Item is Q = 200 and R = 180?
Suppose that your firm uses a periodic review system but otherwise the data are the same as in Problem 17. a. Calculate the P that gives approximately the same number of orders per year as the EOQ. Round your answer to the nearest week b. Find the safety stock and the target inventory level that provide a 95 percent cycle-service level. c. How much larger is the safety stock than with a Q system?
Your firm uses a continuous review system and operates 52 weeks per year. One of the SKUs has the following characteristics. Demand (D) = 20,000 units/year Ordering cost (S) $40/order Holding cost (H) = $2/unit/year Lead time (L) =2 weeks Cycle-service level = 95% Demand is normally distributed, with a standard deviation of weekly demand of 100 units. Current on-hand inventory is 1,040 units, with no scheduled receipts and no backorders. a. Calculate the item’s EOQ. What is the average time, in weeks, between orders? b. Find the safety stock and reorder point that provides a 95 percent cycle-service level. c. For these policies, what are the annual costs of (i) Holding the cycle Inventory (ii) Placing orders? d. A withdrawal of 15 units just occurred. Is it time to reorder? IF so, how much should be ordered?
Suppose that Sam’s Cat Hotel in Problem 7 uses a P system instead of a Q system. The average daily demand is 15 bags (90/6), and the standard deviation of daily demand is 6,124 bags (15/?6). a. What P (In working days) and T should be used to approximate the cost trade-offs of the E0Q? b. How much more safety stock is needed than with a Q system? c. It is time for the periodic review. How much kitty litter should be ordered?
You are in charge of inventory control of a highly successful product retailed by your firm. Weekly demand for this item varies, with an average of 200 units and a standard deviation of 16 units. It is purchased from a wholesaler at a cost of $12.50 per unit. The supply lead lime is 4 weeks. Placing an order costs $50, and the inventory carrying rate per year is 20 percent of the item’s cost. Your firm operates 5 days per week, 50 weeks per year. a. What is the optimal ordering quantity for this item? b. How many units of the item should be maintained as safety stock for 99 percent protection against stock- outs during an order cycle? c. If supply lead time can be reduced 102 weeks, what is the percent reduction in the number of units maintained as safety stock for the same 99 percent stock out protection? d. If through appropriate sales promotions, the demand variability is reduced so that the standard deviation of weekly demand is 8 units Instead of 16, what is the percent reduction (compared to that In part (b) in the number of units maintained as safety stock for the same 99 percent stock out protection?
In a P system the lead time for a box of weed-killer is two weeks and the review period is one week. Demand during the protection interval averages 218 boxes, with a standard deviation of 40 boxes. What is the cycle-service level when the target Inventory level is set at 300 boxes?
Researchers debate the evolutionary value to the virus of its ability to cause disease. Many argue that viruses accidentally cause disease and only in animals that are not the natural host. They state that this strategy may eventually prove fatal to the virus’s future in that host. It is reasoned that the animals will eventually develop immune mechanisms to combat the virus and prevent its spread. Another group of researchers supports the view that disease is a way to enhance the survival of the virus. What position would you take, and what arguments would you give to support your view?