***Use EOQ and continuous review for the \"tegdiw\" and periodic review for the
ID: 362129 • Letter: #
Question
***Use EOQ and continuous review for the "tegdiw" and periodic review for the "widget". The safety stock (SS) are already calculated for you. ***
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 two weeks. Data for both products are as follows:
What is the reorder quantity and reorder point for Tegdiws? (Round your answers to the nearest whole number.)
optimal reorder quantity?________
Reorder point? __________
Inventory controls systems for Widget Q= ________- (inventory on hand)
Hint: answer what order-up-to (OUL) is.
ITEM TEGDIW WIDGET Annual demand 10,000 9,000 Holding cost (% of item cost) 20 % 30 % Setup or order cost $ 110.00 $ 20.00 Lead time 8 weeks 3 week Safety stock 55 units 2 units Item cost $ 5 $ 4What is the reorder quantity and reorder point for Tegdiws? (Round your answers to the nearest whole number.)
optimal reorder quantity?________
Reorder point? __________
What is the inventory control system for Widgets? (Round your answer to the nearest whole number.)Inventory controls systems for Widget Q= ________- (inventory on hand)
Hint: answer what order-up-to (OUL) is.
Explanation / Answer
For TEGDIW :
= 10000 / 52
= 192.31
Optimal order quantity = sqrt of (2DS / H)
= sqrt of [(2x10000x110) / 1]
= sqrt of 2200000
= 1483 units
Reorder point = d x L + Safety stock = 192.31 x 8 + 55 = 1538. 48+ 55 units = 1593.48 or rounded to 1593 units
For WIDGET
= 9000 / 52
= 173. 08 units
Inventory on hand (I) = 0 (since it is not given)
Q = d(T+L) + Safety stock - I
= 173.08(2 +3) + 2 - 0
= (173.08 x 5) + 2 - 0
= 865.4 + 2 - 0
= 867.4 - 0
= 867.4 or rounded to 867 units
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