Problem #1 A manufacturer purchases gears to be used in the assembly of their pr

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Problem #1 A manufacturer purchases gears to be used in the assembly of their products. They use a constant quantity of 600 gears each working day with very little variation in usage. Once they place an order from their supplier, it takes about 12 working days for the gears to arrive. The plant manager believes they can have adequate inventory if they order the gears at the correct time. What is the reorder point (ROP)? Problem #2 You are the purchasing manager for a small appliance distributor. One of your most popular products is a microwave oven. It has an annual demand of 4500 units and each one costs $85. The inventory carrying cost is 10% of the cost of each microwave and you have estimated that it costs your department $20 for each order you place. It takes the manufacturer about two weeks to deliver the microwaves to your warehouse once you place the order. During the two week period, demand is about 90. a) What is the EOQ? b) What is the ROP? c) What is the average inventory? d) What is the annual holding cost? e) How many orders per year would you place?

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