ANT Infra orders two kinds of precast items: A and B for use in its projects from two different suppliers. The precasts are needed throughout the entire 52-week year. Precast A are used at a relatively constant rate and are ordered whenever the remaining quantity drops to the reorder level. While, precast B is ordered from a supplier who delivers by every three weeks. Data for both precast items are as follows: Item Precast A Precast B Annual demand 10,000 5,000 Holding cost (% of item cost) 20% 20% Order cost $150 $25 Lead time 4 weeks 1 week Safety stock 55 units 5 units Item cost $10.00 $2.00 a. Employ Q system for precast A and calculate the EOQ, the reorder point, total inventory cost? b. Employ P system for precast B and estimate the target level inventory and total inventory cost?
ANT Infra orders two kinds of precast items: A and B for use in its projects
from two different suppliers. The precasts are needed throughout the entire
52-week year. Precast A are used at a relatively constant rate and are
ordered whenever the remaining quantity drops to the reorder level. While,
precast B is ordered from a supplier who delivers by every three weeks.
Data for both precast items are as follows:
Item Precast A Precast B
Annual demand 10,000 5,000
Holding cost (% of item
cost)
20% 20%
Order cost $150 $25
Lead time 4 weeks 1 week
Safety stock 55 units 5 units
Item cost $10.00 $2.00
a. Employ Q system for precast A and calculate the EOQ, the reorder
point, total inventory cost?
b. Employ P system for precast B and estimate the target level inventory
and total inventory cost?
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