1) The annual demand for a popular drug is 10,000 bottles. The purchase price of this drug (from the manufacturer) is $55. The retailer incurs $20 every time he places an order. It will cost annually 8% of the purchase price to carry the inventory. Assume 52 weeks per year. Lead time is 2 weeks. Each order is received from the manufacturer in a single delivery.
How much should the store order at one time?
How many times per year should the store order?
How many weeks should be between two consecutive orders?
What is the store’s minimum total annual cost of placing orders & carrying inventory?
What is the reorder point if the company wishes to carry no safety stock?
What is the reorder point if the company wishes to carry a safety stock of 13 bottles?
2) Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakata, the company produces subcomponents at a rate of 300 per day, and it uses these subcomponents at a rate of 12,500 per year (of 250 working days). Holding costs are $2 per item per year, and ordering costs are $30 per order.
What should be the optimum production quantity?
What is the maximum inventory achieved during a production run?
What is the average inventory?
What is the cycle time (number of days in a run)?
What is the run time (time of producing in a cycle)?
What is the total annual cost of producing and storing inventory?