1.
Teresa Cohan is attempting to perform an inventory analysis on one
of her most popular products. Annual demand for this product is 5,000
units; unit cost is $200; carrying cost is considered to be approximately
25% of the unit price. Order costs for her company typically run nearly
$30/order and lead time averages 10 days (assume a 50 week year).
a. What is the EOQ?
b. What is the ROP?
c. What is the total annual cost?
d. How many orders per year should be placed?
e. How many days exist between orders (assume 250 working days per
year)?
2.
Tape enterprises has 10 items in inventory. The inventory manager
has asked for an ABC analysis of the inventory for the following items:
Item

Annual
Demand

Cost($)/Unit

1

3000

50

2

4000

12

3

1500

45

4

6000

10

5

1000

20

6

500

500

7

300

1500

8

600

20

9

1750

10

10

2500

5

3. Jimmy Stephens,
inventory control manager for CalTex, receives wheel bearing from Wheel
Rite, a small producer of metal parts. Wheel Rite can produce only
500 wheel bearings per day. Cal Tex receives 10000 wheel bearings
fro Wheel Rite each year. Because Cal Tex operates 200 working days
each year, its average daily demand of wheel bearings is 50. Ordering
costs for Cal Tex is $40 per order, and carrying costs is $0.60 per wheel
bearing per year. Wheel Rite has agreed to ship the maximum number
of wheel bearings that it produces each day to CalTex once an order has
been received. How many wheel bearings should Cal Tex order at one
time?
4. Jack
McCanna Products offers the following discount schedule for its 4 feet by
8 feet sheets of quality plywood:
Order

Unit Cost

9 sheets or less

$18.00

10 to 50 sheets

$17.50

More than 50 sheets

$17.25
