Reference no: EM132210366

Question 1

The demand for a product is 600 units per week, and the items are withdrawn at a constant rate. The setup cost for placing an order to replenish inventory is $25. The unit cost of each item is $3, and the inventory holding cost is $0.05 per item per week.

(a) Assuming shortages are not allowed, determine how often to make a production run and what size it should be.
(b) If shortage are allowed but cost $2 per item per month, determine how often to order and what size the order should be.

Question 2

Neon lights on the U of A campus are replaced at the rate of 100 units per day. The physical plant orders the Neon lights periodically. It cost $100 to initiate a purchase order. A neon light kept in storage is estimated to cost about $0.02 per day. The load time between placing and receiving an order is 12 days. Determine the optimal Inventory policy for ordering the neon lights.

Question 3

Find the optimal order quantity for a product for which the price-breaks are as follows:

Items  q	Price/Unit
0 ≤ q < 100	Rs. 20
100 ≤ q < 200	Rs. 18
200 ≤ q	Rs. 16

The monthly demand for the product is 600 units. The storage cost is 15% of unit cost and the cost of ordering is Rs. 30 per order.

Question 4
A company stocks an item that is demanded 1000 units per month and the shortages are allowed. If the unit cost is Rs 20 per unit, the cost of making one purchase is Rs 1000, the holding cost for one unit is Rs 40 per year and the cost of one shortage is Rs 150 per year, determine:

(a) The economic purchase quantity.
(b) The time between orders.
(c) The number of orders per year.
(d) The optimum shortages.
(e) The maximum inventory.
(f) The time of items being held.
(g) The optimum annual cost.