Assignment: Inventory Management
A Retailer is facing the following yearly deterministic (demand are known in advance) demand for a given product sold a price of p=30 $/unit.
Month 1 2 3 4 5 6 7 8 9 10 11 12
Demand 120 65 220 10 0 150 60 100 0 200 50 20
The retailer is making the replenishment from a local supplier who sells the items at a per-unit cost of c=20$. Moreover, whenever the retailer makes an order from the supplier, he should pay a fixed transportation cost of 100 $ ( regardless of the quantity carried).
- In addition to the purchasing cost and transportation cost, the store is also carrying a holding cost of h=0.20$/ unit/ month.
Assume the following
- The amount of items held for one month is simplified as to leftover at the end of the month Max (Available Quantity at the beginning of the month -Demand), 0)
- Assume that there is no Lead Time, if you order at any day you get your items same day
- Retailer cannot make more than one order per month
- Retailer must satisfy all the demand the retailer wants to find the best replenishment strategy (When and How Much To order) to meet all demands at the minimum cost /highest profit.
To understand the cost dynamics consider the following example:
• If the retailer orders 200 units at month 1. The associated costs are as follows: Transportation Cost (100)+ Purchasing Cost (200*20=4000) +
• Holding Cost ( Leftover=(200-120)*0.2=80*0.2=16)=4016$
• If the retailer orders 100 units at month 1. The associated costs are as follows: Transportation Cost (100)+ Purchasing Cost (100*20=2000) + Holding Cost ( Leftover=(0)*0.2=0)=2100$.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.