1) Community Hospital expects to use 40,000 pairs of gloves per year. The delivery cost for gloves is $180 and the cost to hold a pair is $.18/year. The firm supplying the hospital charges $.34/pair if the order is less than 9,999, $.32 if between 10,000 & 19,999, $.30 if between 20,000 & 29,999, $.28 if between 30,000 & 39,999, $.26 if between 40,000 & 49,999, and $.24 if over $50,000.
a) What is the optimal order quantity for the hospital?
b) What is the price of each pair of gloves at the optimal order quantity?
c) What is the total inventory cost?
2) Annual demand for a paperback dictionary at the bookstore is 1200 units. Ordering costs are 350, carrying costs are $6 per unit per year, and the lead time is 9 days. The bookstore is open for 300 days of the year.
a) What is the appropriate inventory model for this situation?
b) What is the optimal order quantity?
c) What is the best reorder point?
3) The injection molding department of Alver Inc. uses an average of 40 pounds of a special powder per day. The plant operates 250 days per year. The daily usage of the powder is normally distributed with a standard deviation of 5 pounds per day. The lead time to obtain the powder from a supplier is 9 days. The annual holding cost is $2. per unit and the cost of ordering the powder is $50.
a) Which inventory model should be used in order to minimize total inventory cost?
b) How much should Alver order?
c) How many orders will be placed?
d) How many orders will be placed each year?
e) What will be the annual holding cost?
f) Determine the reorder point for a service level of 97%