234 Units TechGear Inc. sells 24,000 units of a product annually. There are 300 business days in a year and all calculations that follow are based on these business days a year, not 365 days. The company purchases the product at a cost of $40 per unit from a vendor located approximately 90 miles away. When a purchasing order is placed, the company incurs a fixed ordering cost of $600, and it takes 3 days for the product to arrive (i.e., lead time or reorder period). Additionally, there is a holding cost of $20 per inventory unit per year. H 5 6 7 Q1: Without more information provided, the manager, Jay, assumes the demand is stabe throughout the year because 8 9 he has not seen considerable variability in the demand since he joined TechGear less than a year ago. What is the optimal order quantity when placing a purchasing order? 10 11 12 13 Q2: Continued from Q1, what is the reorder point (ROP) so that no old inventory units would remain when the new order arrives, and no stcokouts would have occurred? 14 15 + + Units Units 16 Q3: TechGear was considering whether to use an order quantity 5 times as much as the above order quantity from Q1 17 (i.e., place a larger order) to receive a 5% discount incentive offered by the vendor for the purchasing price. Should TechGear place a larger order every time when reordering from the vendor? You must show your calculation to justify the answer. Yes or No? Show your analysis to justify your Yes or No Q4: The manager, Jane, proposed the company work with another vendor in China for a much better price. However, an order to this Chinese vendor takes 17 days to arrive. With Q1's order quantity, if TechGear accepts Jane's proposal, what should the ROP in Q2 be? Q5: TechGear did not use Jane's proposal and decided to stay with the current vendor. The management recently has been selling the product in boxes, where a box includes 10 units. After looking into the sale data of 250 observations for a reorder period (or lead time, i.e., 3 business days), only 6 situations were found: either 21 boxes, 22 boxes, 23 boxes, 24 boxes, 25 boxes, or 26 boxes had been sold during a reorder period. The frequencies for each situation are listed below. The management has been using the above ROP in Q2. To achieve a service level of 90% or better, the management calculated the minimum safety stock (SS) needed (such SS = 0 if it is not needed). With this SS, there may be an impact on the inventory costs for the year due to the above safety stock. Is this possible impact an increase or decrease in the inventory costs of the year? What is the most possible amount of this impact (in $)? Increase, decrease or neither? Amount of the above increase/decrease/neither (in $) 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Boxes sold Units sold Frequency (observations) 40 41 42 43 44 45 46 222222 21 210 20 220 30 23 230 45 24 240 105 25 250 30 26 260 20 47 > כ 3 x АА