Question 1: Pretexpo is a Turkish manufacturing company and produces fabrics for the 2021 Textiles Trade show which will be held in Belgium. Fabrics are demanded for the show as 100 units per day. Fixed cost for production of fabric is $60 and total material and labor cost per unit fabric is $20, storage and handling costs are $15 per unit per year. Suppose there are 300 working days one year. a) Determine the optimal order quantity. b) What is the time between placement of orders? c) What is the average annual cost of holding and setup due to this product?
Question 1: Pretexpo is a Turkish manufacturing company and produces fabrics for the 2021 Textiles Trade show which will be held in Belgium. Fabrics are demanded for the show as 100 units per day. Fixed cost for production of fabric is $60 and total material and labor cost per unit fabric is $20, storage and handling costs are $15 per unit per year. Suppose there are 300 working days one year.
a) Determine the optimal order quantity.
b) What is the time between placement of orders?
c) What is the average annual cost of holding and setup due to this product?
d) If replenishment lead time is three months, determine the reorder level based on the on-hand inventory.
e) If replenishment lead time is four days, determine the reorder level based on the on-hand inventory.
f) Draw a graph of the amount of inventory over time. Indicate R value and show order placement and order arrival times. Using your graph determine the average amount of inventory. Determine the optimal order quantity.
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