Monopack is a manufacturer of a single product. The company has been concerned about the rising inflation

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Monopack is a manufacturer of a single product. The company has been concerned about the rising inflation rate in the economy for sometime. Currently, Monopack does not incorporate the effects of inflation into its calculation of its EOQ. The company is interested in finding out if inflation will impact its choice of replenishment sizes. Characteristics of the product were found to be D = 3,000 units per year A = $5.45 v = $0.60/unit r = 20%

Note: Assume that the product price is established independent of the ordering policy and that inflation affects A and v in the same manner.

a. Calculate the EOQ in units.

b. Calculate the optimum replenishment quantities when the inflation rate is i = 0.2%, 4%, 9%, and 15%.

c. Calculate the PCP associated with using the EOQ (ignoring inflation) for all values of i.

d. What is the limiting value of the PCP?

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Inventory And Production Management In Supply Chains

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Question Posted: Aug 18, 2024 06:03 AM

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