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Demand/Use and Order Lead Time History Data for Widgets Data is for 60 consecutive days of demand/use and the last 30 orders Assumptions: Demand
Demand/Use and Order Lead Time History Data for Widgets Data is for 60 consecutive days of demand/use and the last 30 orders Assumptions: Demand and lead times are follow fairly stable normal distributions. Demand/use and Order Lead Time data is in days. Instructions: Each team selects (or is assigned) one of the following widgets. Use the data for your given widget and find the following: 1. The EOQ (economic order quantity), given an annual holding cost of 30% and an order cost of $100, assuming the widgets cost $25 each 2. The SS and ROP (reorder point) for service levels of 90%, 95%, and 99% note: for final quantities (e.g., EOQ, SS, ROP) round to nearest whole number EOQ = sqrt(2*D*S/H), where H is the annual holding cost per unit in dollars, D is annual demand, and S is order cost. = ROP (d-bar* L-bar) + SS, and SS = z*sqrt((L-bar * d-sigma^2) + (d-bar^2 * L-sigma^2)), where d-bar is the average daily demand/use, L-bar is the average order lead time, z is the z-score (=normsinv) associated with the service level, d-sigma^2 is the variance in daily demand, and L-sigma^2 is the variance in order lead times.
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