8. 4 The Western Jeans Company purchases denim from Cumberland Textile Mills. The Western Jeans Company uses 35,000 yards of denim per year to make jeans. The cost of ordering denim from the textile company is $500 per order. It costs Western $0.35 per yard annually to hold a yard of denim in inventory. Determine the optimal number of yards of denim the Western Jeans Company should order, the minimum total annual inventory cost, the optimal number of orders per year, and the optimal time between orders. ( Ans: Q=10000 yards: TC=$3500; No. of orders=3.5 per year; Time between orders= 104.3)

Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas’s fastest-moving inventory item has a demand of 6,000 units a year. The purchasing cost of each unit is $16 (additional 5% discount applies if at lease 150 units ordered a time), and the inventory carrying cost is $3 per unit per year. The average ordering cost is $10 per order. It takes about 3 working days for an order to arrive. (This is a corporate operation, and there are 300 working days per year.) Answer the following questions, Q1~Q5. Note that you must include Excel formulas/calculations showing how you arrive at the answer. Q1: Assume that the demand is consistent throughout the year. What is the ROP? Note that stockouts and unnecessary inventory holding should be avoided at any times. Q2: Assume that the demand is consistent throughout the year. Based on the EOQ model, to minimize the costs of purchasing, ordering and inventory holding…

Manipulation Manufacturing Company uses 1,000 units of Chip annually in its production. Order costs consist of P10 for placing a long-distance call to make the order and P40 for delivering the order by truck to the company warehouse. Each Chip costs P100 and the carrying costs are estimated at 15.625% of the inventory cost. If the EOQ for Chip is 80 and the total ordering cost is P625. Compute for the Total Carrying Costs.

Investigate the effects of demand variability on the overall effectiveness of the Wilson approach in inventory management.