1. Determination of the Inventory Control System (30 points) Jill\'s Job Shop bu
ID: 365456 • Letter: 1
Question
1. Determination of the Inventory Control System (30 points) Jill's Job Shop buys two parts (Tegdiws and Widgets) for use in its production systenm 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 three weeks. Data for both products are as follows: ITEM Annual Demand Holding cost (% of item cost) | 2000 Setup or order cost Lead time Safety stock Item cost TEGDIW WIDGET 10,0005,000 20% $150.00$25.00 4 weeks 1 week 55 units5 units $10.00 $2.00 a) What is the inventory control system for Tegdiws? That is, what is the reorder quantity and what is the reorder point? b) What is the inventory control system for Widgets?Explanation / Answer
a) For TEGDIW
= 10000/52
= 192.31
Optimal Reorder quantity = sqrt of (2DS / H)
= sqrt of [(2 x 10000 x 150)/2]
= sqrt of 1500000
= 1224.74 or rounded to 1225 units
Reorder point = d x L + Safety stock
= 192.31 x 4 + 55
= 769.24 + 55
= 824.24 or rounded to 824 units
b) For WIDGET
Order quantity = d(L +T) + Safety stock - I
= 96.15(1+3) + 5 - 0
= (96.15 x 4) + 5 - 0
= 384.6 + 5 - 0
= 389.6 - 0
= 389.6 or rounded to 390 units
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