Read the case carefully:
A drugstore chain decides to study the case of toothpaste to
determine if an improvement in the inventory management system for
this product serves as a model for other products. The demand for
toothpaste in the year was as follows:
- Basic Model Of Economic Quantity To Order Read The Case Carefully A Drugstore Chain Decides To Study The Case Of Tooth 1 (6.4 KiB) Viewed 15 times
for storage, handling, insurance and taxes is 18% of the cost of
the box (for keeping a box in inventory for a year)
Transportation, documentation and other costs related to the
orders, it is estimated that the cost of placing an order is
$500,000. The order takes 2 days to arrive, and the working days in
the year are 250.
Answer the following questions:
Explain the main assumptions of the basic economic order
quantity model?
What would be the economic quantity to order?
What would be the average inventory?
What would be the annual cost of holding the inventory?
How many orders will be made each year?
What would be the annual ordering cost?
What is the annual cost of inventory?
Plot the setup cost, the holding cost, and the total inventory
cost.
Plot inventory usage over time.
What is the time between orders?
What is the ROP reorder point?
MONTH 1 2 3456 DEMAND 3025 2950 3100 3050 2975 2900