1. (*) Pam runs a mail-order business for gym equipment. Annual demand for TricoFlexers is 16,000. The annual holding cost per unit is $2.50, and the cost to place an or- der is $50. What is the economic order quantity? 2. (**) Using the same holding and ordering costs as in problem 1, suppose demand for TricoFlexers doubles, to > 32,000. Does the EOQ also double? Explain what happens. 3. (**) The manufacturer of TricoFlexers has agreed to of- fer Pam a price discount of $5 per unit ($45 rather than $50) if she buys 1,500. Assuming that annual demand is still 16,000, how many units should Pam order at a time? 4. (*) Jimmy's Delicatessen sells large tins of Tom Tucker's Toffee. The deli uses a periodic review system, checking inventory levels every 10 days, at which time an order is placed for more tins. Order lead time is 3 days. Average daily demand is 7 tins, so average demand during the re- order period and order lead time (13 days) is 91 tins. The standard deviation of demand during this same 13-day period is 17 tins. Calculate the restocking level. Assume that the desired service level is 90%. 5. (**) For problem 4, suppose that the standard deviation of demand during the 13-day period drops to 4 tins. What happens to the restocking level? Explain why. 6. (***) For Tom Tucker's Toffee in problem 4, draw a saw- tooth diagram similar to the one in Figure 11.3. Assume that the beginning inventory level is equal to the restock- ing level and that the demand rate is a constant 7 tins per day. What is the safety stock level? (Hint: Look at the formula for calculating restocking level.) What is the aver- age inventory level? 7. () KraftyCity is a large retailer that sells power tools and other hardware supplies. One of its products is the Krafty- Man workbench. Information on the workbench is as follows: Annual demand = 1,200 Holding cost=$15 per year Ordering cost $200 per order What is the economic order quantity for the workbench?

1. (*) Pam runs a mail-order business for gym equipment. Annual demand for TricoFlexers is 16,000. The annual holding cost per unit is $2.50, and the cost to place an order is $50. What is the economic order quantity? 2. (*) Using the same holding and ordering costs as in problem 1, suppose demand for TricoFlexers doubles, to 32,000. Does the EOQ also double? Explain what happens. 3. (*) The manufacturer of TricoFlexers has agreed to offer Pam a price discount of $5 per unit ( $45 rather than $50 ) if she buys 1,500 . Assuming that annual demand is still 16,000, how many units should Pam order at a time? 4. (*) limmy's Delicatessen sells large tins of Tom Tucker's Toffee. The deli uses a periodic review system, checking inventory levels every 10 days, at which time an order is placed for more tins. Order lead time is 3 days. Average daily demand is 7 tins, so average demand during the reorder period and order lead time (13 days) is 91 tins. The standard deviation of demand during this same 13-day period is 17 tins. Calculate the restocking level. Assume that the desired service level is 90%. 5. (*) For problem 4, suppose that the standard deviation of demand during the 13-day period drops to 4 tins. What happens to the restocking level? Explain why. 6. (**) For Tom Tucker's Toffee in problem 4, draw a sawtooth diagram similar to the one in Figure 11.3. Assume that the beginning inventory level is equal to the restock. ing level and that the demand rate is a constant 7 tins per day. What is the safety stock level? (Hint: Look at the formula for calculating restocking level.) What is the average inventory level? 7. () KraftyCity is a large retailer that sells power tools and other hardware supplies. One of its products is the KraftyMan workbench. Information on the workbench is as follows: AnnualdemandHoldingcostOrderingcost=1,200=$15peryear=$200perorder What is the economic order quantity for the workbench