Prob 4: Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside's generator production operation will require 2000 components per month throughout the year (24,000 units annually). Assume that the ordering costs are $20 per order, the unit cost is $2.50 per component, and annual holding costs are 25% of the value of the inventory. Westside has 250 working days per year and a lead time of 4 days. Current production line has an annual capacity of 30,000 units. Answer the following inventory policy questions: a. Rewrite the inputs using standard notations (D, Co, Ch, ...) b. What is the reorder point? c. What is the cycle time? d. What are the optimal order quantity and the total annual cost? e. Calculate the optimal production lot size.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Prob 4: Westside Auto purchases a component used in the manufacture of automobile generators
directly from the supplier. Westside's generator production operation will require 2000 components
per month throughout the year (24,000 units annually). Assume that the ordering costs are $20 per
order, the unit cost is $2.50 per component, and annual holding costs are 25% of the value of the
inventory. Westside has 250 working days per year and a lead time of 4 days. Current production line
has an annual capacity of 30,000 units. Answer the following inventory policy questions:
a. Rewrite the inputs using standard notations (D, Co, Ch, ... )
b. What is the reorder point?
c. What is the cycle time?
d. What are the optimal order quantity and the total annual cost?
e. Calculate the optimal production lot size.
Transcribed Image Text:Prob 4: Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside's generator production operation will require 2000 components per month throughout the year (24,000 units annually). Assume that the ordering costs are $20 per order, the unit cost is $2.50 per component, and annual holding costs are 25% of the value of the inventory. Westside has 250 working days per year and a lead time of 4 days. Current production line has an annual capacity of 30,000 units. Answer the following inventory policy questions: a. Rewrite the inputs using standard notations (D, Co, Ch, ... ) b. What is the reorder point? c. What is the cycle time? d. What are the optimal order quantity and the total annual cost? e. Calculate the optimal production lot size.
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