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Suppose demand is know and constant at 500 units per year (one year has 250 working days). The holding cost is $2 per unit per year and the ordering cost is $20 per order.   Also assume that the lead time is 10 days.   Compute the optimal order quantity (EOQ) and the optimal annual inventory cost. Draw a picture of the evolution of the inventory level with time.   Indicate the ROP on the picture as well as the length of the cycle.   Now assume that the lead time is 90 days. Indicate the ROP on the picture.

Suppose demand is know and constant at 500 units per year (one year has 250 working days). The holding cost is $2 per unit per year and the ordering cost is $20 per order.   Also assume that the lead time is 10 days.   Compute the optimal order quantity (EOQ) and the optimal annual inventory cost. Draw a picture of the evolution of the inventory level with time.   Indicate the ROP on the picture as well as the length of the cycle.   Now assume that the lead time is 90 days. Indicate the ROP on the picture.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Suppose demand is know and constant at 500 units per year (one year has 250 working days). The holding cost is $2 per unit per year and the ordering cost is $20 per order.   Also assume that the lead time is 10 days.

 

Compute the optimal order quantity (EOQ) and the optimal annual inventory cost. Draw a picture of the evolution of the inventory level with time.   Indicate the ROP on the picture as well as the length of the cycle.

 

Now assume that the lead time is 90 days. Indicate the ROP on the picture. 

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