Consider Item i A(units/year) Ci an inventory system with 4 items: 1 2 3 4 7,200 4,000 500 2,500 2.00 0.90 5.00 0.81 The inventory manager argues that there is no way that he can evaluate K and i; however, he admits that K/i is reasonably constant across the items, which he assumes to be 500. He has been following a 'power-of-two' policy for each item, where the base-period is a month. a) Characterize the policy followed by the manager. b) What K/i value gives the same average cycle stock (in dollars) under EOQ as the current rule? c) What K/i value gives the same N under EOQ as the current rule?

Elements Of Electromagnetics
7th Edition
ISBN:9780190698614
Author:Sadiku, Matthew N. O.
Publisher:Sadiku, Matthew N. O.
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2. Consider an inventory system with 4 items:
Item i
(units/year) Ci
1
2
3
4
7,200
4,000
500
2,500
2.00
0.90
5.00
0.81
The inventory manager argues that there is no way that he can evaluate K and
i; however, he admits that K/i is reasonably constant across the items, which
he assumes to be 500. He has been following a 'power-of-two' policy for each
item, where the base-period is a month.
a) Characterize the policy followed by the manager.
b) What K/i value gives the same average cycle stock (in dollars) under EOQ
as the current rule?
c) What K/i value gives the same N under EOQ as the current rule?
Transcribed Image Text:2. Consider an inventory system with 4 items: Item i (units/year) Ci 1 2 3 4 7,200 4,000 500 2,500 2.00 0.90 5.00 0.81 The inventory manager argues that there is no way that he can evaluate K and i; however, he admits that K/i is reasonably constant across the items, which he assumes to be 500. He has been following a 'power-of-two' policy for each item, where the base-period is a month. a) Characterize the policy followed by the manager. b) What K/i value gives the same average cycle stock (in dollars) under EOQ as the current rule? c) What K/i value gives the same N under EOQ as the current rule?
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