Davis Corporation is a major manufacturer of food processors. It purchases motors from Campbell Corporation Annual demand is 104,000 motors per year or 2,000 motors per week. The ordering cost is $100 per order. The annual carrying cost is $20.80 per motor. It currently taken 3 weeks to supply an order to the assembly plant Read the requirements Requirement 1. What is the optimal number of motors that Davio's managers should order according to the EQ model? Begin by selecting the formula used to calculate EQ (0-Demand in units for one year, P = Ordering cost per purchase order, C.Carrying cost of one unit in stock, QAny order quantity) The optimal number of motors per order is motors Requirement 2. At what point should managers reorder the motors, assuming that both demand and purchase-order lead time are known with certainty? Determine the formula used to calculate the reorder point for reordering motors, then calculate the reorder point Reorder point motors Requirement 3. Now assume that demand can vary during the 3-week purchase-order load time. The table shows the probability distribution of various demand levels. If Davis runs out of stock, it would have to rush order the motors at an additional cost of $3 per motor How much safety stock should the assembly plant hold? How will this affect the reorder point and reorder quantity? The assembly plant should hold motors as safety stock because when this number of motors are held, the total stockout and carrying costs are the This will the reorder point to motors. The reorder quantity will Requirement 1. What is the optimal number of motors that Davis's man Begin by selecting the formula used to calculate EOQ. (D = Demand in u in stock, Q = Any order quantity) Shy 3 per order is motors. should managers reorder the motors, assu D EOQ= (1 + p) calculate the reorder point for reordering 2DP EOQ= that demand can vary during the 3-week po ut of stock, it would have to rush order the this affect the reorder point and reorder qua DP QC EOQ= Q 2 + ild motors as safety stock beca y costs are the This will the reorder point to motors. The assembly plant Read the requirements. Requirement 1. What is the optimal number of motors that Davis's managers should order according to Begin by selecting the formula used to calculate EOQ. (D = Demand in units for one year, P = Ordering ca in stock, Q = Any order quantity) The optimal number of motors per order is motors Requirement 2. At what point should managers reorder the motors, assuming that both demand and purc Determine the formula used to calculate the reorder point for reordering motors, then calculate the reorder x Reo Annual demand an vary during the 3-week purchase-order lead time. The tabl yould have to rush order the motors at an additional cost of $3 reorder point and reorder quantity? Cost per motor 1 motors as safety stock because when this number of motors Demand per week EOQ to motors. The reorder quantity will Number of months Ordering cost per order Purchasing lead time (wks)
