Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A manager must set up inventory ordering systems for two new production items, item X and item Y. Item X can be ordered at any

A manager must set up inventory ordering systems for two new production items, item X and item Y. Item X can be ordered at any time, but item Y can be ordered only once every four weeks. The company operates 50 weeks a year and the weekly usage rates for both items are normally distributed. The manager has gathered the following information about the items

Item x

Item y

Average weekly demand

60 units

70 units

Standard deviation

4 units per week

5 units per weeks

Unit cost

RM 15

RM20

Annual holding cost

30%

30%

Ordering cost

RM 70

RM 30

Lead time

2 weeks

2 weeks

Acceptable stockout risk

2.5%

2.52%

- When should the manager reorder item X?

- When should the manager reorder item Y?

- Calculate the total inventory cost for item X

- Compute the order quantity for item Y if 110 units are on hand at the time the order is placed

- Calculate the total inventory cost for item Y

Step by Step Solution

3.38 Rating (154 Votes )

There are 3 Steps involved in it

Step: 1

Book 14 Reendar point of 4 Notes 60X2 196X9X VZ 120 3... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Operations Management

Authors: William J Stevenson

12th edition

2900078024107, 78024102, 978-0078024108

More Books

Students also viewed these Accounting questions

Question

What are the main benefits of a lean system?

Answered: 1 week ago

Question

Why are priority rules needed?

Answered: 1 week ago