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7. A bank uses a certain form at a uniform rate of 60 pads per week during each of the 52 weeks per This year it is in operation. Every replenishment order it places is delivered at one time. No minimum inventory is carried. The cost of placing and receiving an order is $15. The purchase price is $ 2 per pad. The inventory carrying cost, in terms of an amount per pad per year, is estimated to be 25% of the unit purchase price of $2. The lead time is three weeks. a. Determine the value of the EOQ b. With the use of the given data and the calculated value of the economic lot size, determine the following: 1. Reorder point 2. Maximum inventory

7. A bank uses a certain form at a uniform rate of 60 pads per week during each of the 52 weeks per This year it is in operation. Every replenishment order it places is delivered at one time. No minimum inventory is carried. The cost of placing and receiving an order is $15. The purchase price is $ 2 per pad. The inventory carrying cost, in terms of an amount per pad per year, is estimated to be 25% of the unit purchase price of $2. The lead time is three weeks. a. Determine the value of the EOQ b. With the use of the given data and the calculated value of the economic lot size, determine the following: 1. Reorder point 2. Maximum inventory

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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SUBJECT: MANAGEMENT SCIENCE

LESSON: INVENTORY

7. A bank uses a certain form at a uniform rate of 60 pads per week during each of the 52 weeks per This year it is in operation. Every replenishment order it places is delivered at one time. No minimum inventory is carried. The cost of placing and receiving an order is $15. The purchase price is $ 2 per pad. The inventory carrying cost, in terms of an amount per pad per year, is estimated to be 25% of the unit purchase price of $2. The lead time is three weeks. a. Determine the value of the EOQ b. With the use of the given data and the calculated value of the economic lot size, determine the following: 1. Reorder point 2. Maximum inventory 3. Average inventory 4. Average number of orders per week 5. Average order cost per week 6. Average carrying cost per week 7. Relevant total average cost per week 8. Relevant total average cost per year.
Transcribed Image Text:7. A bank uses a certain form at a uniform rate of 60 pads per week during each of the 52 weeks per This year it is in operation. Every replenishment order it places is delivered at one time. No minimum inventory is carried. The cost of placing and receiving an order is $15. The purchase price is $ 2 per pad. The inventory carrying cost, in terms of an amount per pad per year, is estimated to be 25% of the unit purchase price of $2. The lead time is three weeks. a. Determine the value of the EOQ b. With the use of the given data and the calculated value of the economic lot size, determine the following: 1. Reorder point 2. Maximum inventory 3. Average inventory 4. Average number of orders per week 5. Average order cost per week 6. Average carrying cost per week 7. Relevant total average cost per week 8. Relevant total average cost per year.
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