Question:

Your company manufactures approximately 16,000 RV motor homes a year, and sells them for

prices between $35,000 and $220,000. You are responsible for maintaining the inventory for the

required tires to meet this demand. You know that your normal weekly demand for tires is

approximately 1500, with a standard deviation of 570 tires a week. Because of the high value of

the finished product, your company has a standard for its inventory of having a 97% chance of

having stock in inventory between orders. Failure to have the tires through normal channels will

cost the company $200 per tire to expedite them to the factory in 0.5 weeks. The tires cost $125

each, FOB at the tire factory in Akron, Ohio. The normal transportation cost is $12 each from

Akron to your factory. From the time of making the order to when the tires are available at the

factory, it takes 3 weeks (0.5 weeks for order processing; 2 weeks for picking and transportation;

and 0.5 weeks for moving from receiving to the assembly line). You have determined that your

inventory carrying cost is approximately 25 percent and it costs you $80 to make an order.

Assume 52 weeks a year in your analysis

What is the Reorder Point strategy using the following data. Use both EOQ and DDLT for your

order size. State your two plans (based upon EOQ and DDLT) as well as its total service level

(fill rate) and yearly cost. What is your recommended plan?

what is the Periodic Review strategy using the following data. Use both EOQ and DDLT for your

order size. State your two plans (based upon EOQ and DDLT) as well as its total service level

(fill rate) and yearly cost. What is your recommended plan?

Timeries Value 15 10 Plot a v what type of pattern exists in the data? Horizontal Week b. Develop the three-week moving average forecasts for this time series. Compute MSE and a forecast for week 7 (to 2 decimals if necessary) MSE The forecast for week 7 c. Use a 2 to compute the exponential smoothing forecasts for the time series. Compute MSE and a forecast for week 7 (to 2 decimals). MSE The forecast for week 7 33 d. Compare the three-week moving average approach with the exponential smoothing approach using a 2 which appears to provide more accurate forecasts based on MSE? The three week moving average provides a better forecast since it has a smaller HSE