19-20 Tabulation Approach; Economic Order Quantity; Reorder Point (Appen- dix 9A) You have been engaged to install an in

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19 20 Tabulation Approach Economic Order Quantity Reorder Point Appen Dix 9a You Have Been Engaged To Install An In 1 (43.91 KiB) Viewed 43 times

19-20 Tabulation Approach; Economic Order Quantity; Reorder Point (Appen- dix 9A) You have been engaged to install an inventory control system for Rockton, Incor- porated. Among the inventory control features that Rockton desires in the system are indicators of "how much to order" and "when to order." The following information is fur- nished for one itcm, called a thermocouple, that is carried in inventory: # Thermocouples cost Rockton $50 each and must be ordered in lots of 100 from the company's supplier. The cost of placing an order is $40. b. Rockton uses 6,000 thermocouples a year. There are 250 working days in a year. Mini- mum and maximum usages are 10 and 40 thermocouples per working day respectively. c. There is a delay of 10 working days between the time an order is placed with the sup- plier and the day the thermocouples are delivered to Rockton. A stock-out (complete exhaustion of the inventory) of thermocouples would stop production d. The cost of maintaining a thermocouple in stock is $2 per year for storage and 10% of the purchase price for insurance, taxes, and interest. 1. Using the tabular approach, determine the E00. (The schedule should contain columns for order sizes of 100, 200, 300, and 400 units.) 2. Compute the EOQ using the formula approach. (Round off your answer to the nearest whole unit.) Which answer is correct for the EOQ---the answer derived using the tabu- Iar approach or the answer derived using the formula approach? 3. Determine the safety stock and reorder point that are required to avoid a stock-out. Required DA ranta