Inventory
SOLVE
1. SaveMart needs 1000 coffee makers per year. Ordering cost is
$100 per order. Carrying cost is $31. SaveMart is open 365 days/yr.
 What is the optimal order quantity (EOQ)?
 How many times per year does the store reorder?
 What is the length of an order cycle?
 What is the total annual cost if the EOQ is ordered?
Inventory
2. The Friendly Sausage Factory (FSF) can produce hot dogs at a rate
of 5,000 per day. FSF supplies hot dogs to local restaurants at a
steady rate of 250 per day. The cost to prepare the equipment for
producing hot dogs is $66. Annual holding costs are 45 cents per
hot dog. The factory operates 300 days a year. Find:
a) The optimal run size.
b) Minimum total annual cost for carrying and setup.
c) The cycle length.
d) The run length .
Inventory
3. A manager has just received a revised price schedule from a
vendor. What order quantity and number of orders should the
manager use in order to minimize total costs? Annual Demand is
120 units, ordering cost is $8, and annual carrying cost is $1 per
unit. The price schedule is:
Quantity
Price
1 to 39
$14
40 to 59
$13
60 to 89
$12
90 and more
$11
Inventory
4. Suppose that you are the manager of a production department that
uses 400 boxes of rivets per year. The supplier quotes you a price
of $8.50 per box for an order size of 199 boxes or less, a price of
$8.00 per box for orders of 200 to 999 boxes, and a price of $7.50
per box for an order of 1,000 or more boxes. You assign a holding
cost of 20 percent of the price to this inventory. Assume ordering
cost is $80/order. What order quantity would you use to minimize
the total annual costs and what is the number of orders per year?