Answered step by step
Verified Expert Solution
Question
1 Approved Answer
EOQ / (Q,r) policy: This question is motivated by the Littlefield game, and is on (Q,r) inventory control model. Notes about data: No Littlefield game
- EOQ / (Q,r) policy:This question is motivated by the Littlefield game, and is on (Q,r) inventory control model. Notes about data: No Littlefield game play is needed to answer this question. The data heremay not correspond to the data in the dry-run or actual Littlefield game play. In fact, the data in this question is customized to each student. Let n= integer corresponding to the sum of the last four digits of your UC M# - if you are taking this in a group, you may pick either student's M# to answer this question. For instance, if the last 4 digits of your M# is 1234, n = 1+2+3+4 = 10. Suppose you will play the Littlefield Game and you forecast that the daily demand rate is stable at a mean value of 10.5 units per day with a standard deviation of 3.24 units per day, where std.dev. is approximately sqrt(mean). Each customer demand unit consists of (is made from) 60 kits of material. The cost per kit is 10$ and so the unit material cost is 600 $/unit. The effective annual interest rate for working capital (carrying WIP inventory) is 10%$/$ per year; and the company operates for 350 working days each year. The fixed order cost is 500*(1+) $/order, where n was discussed above; you may round the fixed order cost to the nearest integer. The lead time for delivery of kit replenishment orders placed with the supplier is 4 days. Item inventory replenishment is automatically controlled using a computer program that follows a (Q,r) policy
(10 points) Calculate a good value for the order quantity Q and a good Power-of-Two reorder interval in days (clearly show the approach you used to pick your Power-of-two reorder interval). Calculate the order quantity corresponding to your Power-of-Two Interval. By what percentage does the power-of-two reorder interval increase relevant annual fixed order and inventory cycle-stock holding costs, relative to the optimal [economic] reorder interval?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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