Transcript Chapter 6 Inventory Controls

Chapter 6 Inventory Controls
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Example 1
Paul Peterson is the inventory manager for Office
Supplies, Inc., a large office supply warehouse. The
annual demand for paper punches is 20,000 units. The
ordering cost is $100 per order, and the carrying cost is
$5 per unit per year. What is the economic order
quantity? How many orders should he place? What is
the total cost?
ISAT 645 / CMPS 591
Example 2
Paul Peterson is considering manufacturing hole-punch
devices. The annual demand is 20,000 units. The setup cost
is $100 per order, and the carrying cost is $5 per unit per
year. The demand rate is 100 units per day and the
production rate is 150 units per day. What is the most
economic production size? How long does each production
run last? How many production runs should have in one
year?
Example 3
Paul Peterson has found a supplier of hole punches that
offers quantity discounts. The annual demand is 20,000
units, the ordering cost is $100 per order, and the carrying
cost is 0.5 of the unit price. For quantities that vary from 0
to 1,999, the unit price is $10. The price is $9.98 for
quantities that vary from 2,000 to 3,999 units and $9.96 for
quantities that vary from 4,000 to 10,000 units. Should he
take the quantity discount?
Example 4
Steve Handel has observed the following demand over the
lead time for a product
Reorder Point
Number of units
Probability
ROP
30
40
50
60
70
0.1
0.2
0.3
0.2
0.2
1.0
Example 4 -- Contd
The carrying cost is $30 per unit per year., and the stockout
cost is $50 per unit per stockout. Two orders are placed per
year. Given this information, Steve would like to determine
the best safety stock policy.
Example 5
The Hinsdale Company carries an inventory that has
a normally distributed demand during the reorder
period. The mean demand is 350 units and the
standard deviation is 10. Hinsdale wants to follow
a policy that results stockouts occurring only 2%
of the time. How much safety stock should be
maintained?
Example 6
Kimberly Caller is in charge of four inventory items.
The inventory demand and sales price of four
inventory items. The inventory demand and sales
price for each item is summarized in the following
table. Using ABC analysis, how should these
inventory items be controlled?
Item 1
Item 2
Item 3
Item 4
Demand
Price
20,000
8,000
7,000
200
$10.00
100.00
5.00
5.00