Question: For problem in the chapter, suppose the Grinell Machine Shop produces its tables at a rate of two per day (250 working days per year).
a. What is the optimal lot size?
b. Draw a graph of on hand inventory versus time.
c. What is the maximum value of inventory?
Problem: A supplier has come to you and offered the following deal. If you buy 29 or fewer cases of cleaning solution, the cost will be $25 for each case. If you buy 30 or more cases, the cost will be $20 per case. Assume your cost of carrying inventory is 15 percent a year, it costs $20 for you to order the material, and you use 50 cases per year.
a. How many cases should you order?
b. Would you negotiate with this supplier for a further discount? Explain the quantities and prices that you would negotiate for and why those quantities and prices are selected.