Exam 6: Inventory Control Models

Furniture Manufacturers Inc.uses 20,000 loads of lumber per year.A load of lumber costs $500 and the carrying cost is 10 percent of the unit cost.The cost to order is $200 per order and the lead-time is three working days.Assuming 200 working days, determine: (a)the economic order quantity. (b)the reorder point. (c)number of orders per year. (d)working days between orders.

The annual demand for a product has been projected at 2,000 units.This demand is assumed to be constant throughout the year.The ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost.The purchase cost is $40 per unit.There are 250 working days per year.Whenever an order is placed, it is known that the entire order will arrive on a truck in 6 days.Currently, the company is ordering 500 units each time an order is placed.What level of safety stock would give a reorder point of 60 units?

Consider the material structure tree for item A.If 10 units of A are needed, how many units of E are needed?

An increase in ordering cost will increase the economic order quantity, holding all other factors constant.

The two fundamental decisions you must make when controlling inventory are "How much to order? and "What does it cost?"

Theft is one of the "ordering cost factors."

Consider the material structure tree for item A above.If 40 units of A are needed, how many units of D are needed if there are already 40 B's, 40 C's, and 200 D's in inventory?