Jills Job Shop buys the following Part X for use in its production system. The parts are needed through weeks of the year. Lead time is weeks. Data for the part are as follows:

ITEM X

Annual demand

Holding cost per unit per year $

Order cost $

Item cost $

Safety stock units

a Compute the optimal order quantity and total cost. points

b What is the reorder point for X points

Problem :

Benjis Bar and Restaurant uses quart bottles of an imported wine each year. Weekly demand is bottles closed two weeks per year with a standard deviation of bottles. The wine costs $ per bottle and is served only in whole bottles because it loses its bubbles quickly. Benji figures that it costs $ each time an order is placed, and holding costs are percent of the purchase price. It takes four weeks for an order to arrive.

Benji would like to use an inventory system Fixed Order Quantity model that minimizes inventory cost and will provide a percent service probability.

At what inventory level should he place an order? points

Problem :

UDI Pharmaceuticals orders its antibiotics every three weeks days when a salesperson visits from one of the Pharmaceutical companies. Tetracycline is one of its most prescribed antibiotics, with average daily demand of capsules. The standard deviation of daily demand was derived from examining prescriptions filled over the past three months and was found to be capsules. It takes four days for the order to arrive.

UDI would like to use Fixed Time Period Model. UDI would like to satisfy percent of the prescriptions. The salesperson just arrived, and there are currently capsules in stock.