Jill\'s Job Shop buys two parts (Tegdiws and Widgets) for use in its production

Question

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 four weeks. Data for both products are as follows ITEM Annual demand Holding cost (% of item cost) Setup or order cost Lead time Safety stock Item cost TEGDIW WIDGET 7,000 10,000 25 % 25 % $140.00 $ 30.00 4 weeks 45 units 1 week 10 units 10 What is the reorder quantity and reorder point for Tegdiws? (Round your answers to the nearest whole number.) Optimal reorder quantity Reorder point units units What is the inventory control system for Widgets? (Round your answer to the nearest whole number.) Hint: answer what order-up-to (OUL) is Inventory control system for Widgets q = - I (Inventory on hand)

Explanation / Answer

A) Working days = Days/Year = 52 weeks year = 364 days

EOQ is a type of reorder quantity.

EOQ = SQRT(2 × Annual demand × Cost Per Order / Holding Cost Per Order) = SQRT(2 × 7000 * 140/ 0.25) = 2800

Reorder point (ROP) = (Annual demand/Number of working days) * Lead time = (7000/364) * 28 = 538.46 = 538

B) Inventory control system for Widgets:

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