Question
Leaky Pipe, a local retailer of plumbing supplies, faces demand for one of its SKUs at a constant rate of 30,000 units per year. It
Leaky Pipe, a local retailer of plumbing supplies, faces demand for one of its SKUs at a constant rate of 30,000 units per year. It costs Leaky Pipe $10 to process an order to replenish stock and $1 per unit per year to carry the item in stock. Stock is received 4 working days after an order is placed. No back ordering is allowed. Assume 300 working
days a year.
a. What is Leaky Pipe’s optimal order quantity?
b. What is the optimal number of orders per year?
c. What is the optimal interval (in working days) between orders?
d. What is the demand during the lead time?
e. What is the reorder point?
f. What is the inventory position immediately after an order has been placed?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Lets solve this step by step using the Economic Order Quantity EOQ model Given Annual demand D 30 000 D 30000 D30000 units per year Order cost S 10 S 10 S10 dollars per order Holding cost per unit per ...Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started