Fixed cost per replenishment

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Reference no: EM13742036

Q.3 Consider an item with the following deterministic, time varying demand pattern:

Week: 1 2 3 4 5 6 7 8 9 10 11 12
Demand: 50 80 180 80 0 0 180 150 10 100 180 130

Suppose that the pattern terminates at week 12. Let other relevant characteristics of the item be:
1. Inventory carrying cost per week (incurred only on units carried over from one week to the next) is £0.20/unit.
2. Fixed cost per replenishment is £30.
3. Initial inventory and replenishment lead time both zero.

a) Find the fixed economic order quantity (rounded to the nearest integer number of months of supply; that is, each time the EOQ, based on the average demand through the entire twelve months, is adjusted so that it will last for exactly an integer number of months)
b) A fixed time supply (an integer number of periods), based on the EOQ expressed as time supply, using the average demand rate for the 12 months.

Hint: For each case, it would be helpful to develop a table with at least the following columns: (1)Month, (2)Replenishment Quantity, (3)Starting Inventory, (4) Demand, (5) Ending Inventory

Reference no: EM13742036

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