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Module 5 Assignment Problems Be sure to always round inventory quantities (Q, R, SS, Imax) values up to the next integer for the final answers. All other values should be calculated based on the standard formulas without rounding them to integers and should be entered with one decimal place (e.g. average inventory, average number of orders, etc.). M5.1 Chris Froome is a purchasing agent for a firm that sell components for high performance bicycles. One of the most popular components is the TDF bicycle frame which has an annual demand of 1,750 units. The cost of each frame is $675 and the inventory carrying cost is estimated to be 18% of the cost of each frame. Chris has made a study of the costs involved in placing an order for any of the frames the firm stocks, and he has concluded that the average ordering cost of $73 per order. Furthermore, it takes about one week for an order to arrive from the supplier, and the TDF operates 50 weeks per year. a) What is the annual ordering cost? b) What is the annual holding cost? c) How many orders (on average) would be placed per year? d) What is the average inventory? e) What is the reorder point? f) What is the EOQ? M5.2 Hiking Boots R Us is a local shoe store in Franklin. Annual demand for a popular hiking boot is 700 pairs per year, and Naira Quintana, the owner of Hiking Boots R Us, has the habit of ordering 60 pairs of these hiking boots every time he places an order. Naira estimates that the ordering cost is $20 and the cost of the hiking boots is $63. (Goal Seek would be useful if you are using the Excel template, otherwise you can use the equations, this is a situation when you know "Q" and are determining other parameters in the calculation of "Q"). a) What is the annual ordering cost if the optimal ordering quantity is 60? b) What is the carrying cost (%) if the optimal ordering quantity is 60? (Enter real number- i.e. 12.5% should be en red as 12.5) c) What is the annual holding cost if the optimal ordering quantity is 60? d) What is the EOQ if carrying cost is 15%? SKU Code Unit Value Demand (units) 4991 320 2456 7006 5995 8101 1448 1,500.00 500.00 45.00 50.00 10.00 12.00 10.00 110.00 5.00 125.00 20.00 8.00 675 1,700 1,500 6,000 2,000 1,750 120 1204 5940 3129 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2,500 100 600 1,200 1,500 330 800 200 es is en is in en is in en is in en is in en is 4.00 17.00 7.00 20.00 4.00 800 6.00 1021 5231 6912 9034 2282 8447 2144 7087 8989 2698 4682 3141 3712 3310 4683 7060 3312 4351 3943 6466 7670 500 85 25.00 3.00 2.00 8.00 1.00 700 1,000 200 1,500 1,200 300 1.00 3.00 0.75 625 410 0.75 1.50 125 0.90 2.00 200 75 Module 5 Assignment Problems Be sure to always round inventory quantities (Q, R, SS, Imax) values up to the next integer for the final answers. All other values should be calculated based on the standard formulas without rounding them to integers and should be entered with one decimal place (e.g. average inventory, average number of orders, etc.). M5.1 Chris Froome is a purchasing agent for a firm that sell components for high performance bicycles. One of the most popular components is the TDF bicycle frame which has an annual demand of 1,750 units. The cost of each frame is $675 and the inventory carrying cost is estimated to be 18% of the cost of each frame. Chris has made a study of the costs involved in placing an order for any of the frames the firm stocks, and he has concluded that the average ordering cost of $73 per order. Furthermore, it takes about one week for an order to arrive from the supplier, and the TDF operates 50 weeks per year. a) What is the annual ordering cost? b) What is the annual holding cost? c) How many orders (on average) would be placed per year? d) What is the average inventory? e) What is the reorder point? f) What is the EOQ? M5.2 Hiking Boots R Us is a local shoe store in Franklin. Annual demand for a popular hiking boot is 700 pairs per year, and Naira Quintana, the owner of Hiking Boots R Us, has the habit of ordering 60 pairs of these hiking boots every time he places an order. Naira estimates that the ordering cost is $20 and the cost of the hiking boots is $63. (Goal Seek would be useful if you are using the Excel template, otherwise you can use the equations, this is a situation when you know "Q" and are determining other parameters in the calculation of "Q"). a) What is the annual ordering cost if the optimal ordering quantity is 60? b) What is the carrying cost (%) if the optimal ordering quantity is 60? (Enter real number- i.e. 12.5% should be en red as 12.5) c) What is the annual holding cost if the optimal ordering quantity is 60? d) What is the EOQ if carrying cost is 15%? SKU Code Unit Value Demand (units) 4991 320 2456 7006 5995 8101 1448 1,500.00 500.00 45.00 50.00 10.00 12.00 10.00 110.00 5.00 125.00 20.00 8.00 675 1,700 1,500 6,000 2,000 1,750 120 1204 5940 3129 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2,500 100 600 1,200 1,500 330 800 200 es is en is in en is in en is in en is in en is 4.00 17.00 7.00 20.00 4.00 800 6.00 1021 5231 6912 9034 2282 8447 2144 7087 8989 2698 4682 3141 3712 3310 4683 7060 3312 4351 3943 6466 7670 500 85 25.00 3.00 2.00 8.00 1.00 700 1,000 200 1,500 1,200 300 1.00 3.00 0.75 625 410 0.75 1.50 125 0.90 2.00 200 75