Reference no: EM132524539

Question - EOQ analysis. Thompson Paint Company uses 60,000 gallons of pigment per year. The cost of ordering pigment is $200 per order, and the cost of carrying the pigment in inventory is $1 per gallon per year. The firm uses pigment at a constant rate every day throughout the year.

a. Calculate the EOQ.

b. Assuming that it takes 20 days to receive an order once it has been placed, determine the reorder point in terms of gallons of pigment. (Note: Use a 360-day year.)

2. EOQ and Reorder Point. Mama Leone's Frozen Pizzas uses 50,000 units of cheese per year. Each unit costs $2.50. The ordering cost for the cheese is $250 per order, and it's carrying cost is $0.50 per unit per year. Calculate the firm's economic order quantity (EOQ) for the cheese. Mama Leone's operates 250 days per year and maintains a minimum inventory level of 2 days' worth of cheese. If the lead time to receive orders of cheese is 3 days, calculate the reorder point.

3. Reorder point. Beeman Gas and Electric (BG&E) is required to carry a minimum of 20 days'average coal usage, which is 100 tons of coal. It takes 10 days between order and delivery. At what level of coal would BG&E reorder?

4. Mentions and describe the common techniques for managing inventory.