How much should we order each time to minimize total cost

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Reference no: EM133737000

Assignment: Working on Procurement & Inventory Control

Forecasting

I. The Hartley-Devis motorcycle dealer in the Minneapolis St. Paul area wants to be able to forecast accurately the demand for the Roadhog Super motorcycle during the next month. From sales records, the dealer has accumulated the data in the adjacent table for the past year.

1. Compute a three-month moving average forecast of demand for April through January (of the next year).
2. Compute a five-month moving average from June through January.
3. Compare the two forecasts computed in parts (1) and (2) using MAD. Which one should the dealer use for January of next year?

Month	Motorcycle sales
January	9
February	7
March	10
April	8
May	7
June	12
July	10
August	11
September	12
October	10
November	14
December	16

II. Consider the following demand data for outdoor recreational clothing:

	Winter	Spring	Summer	Fall	Total
2021	130	205	115	360	810
2022	135	210	145	370	860
2023	145	230	160	430	965
Total	410	645	420	1160	2635

Develop a seasonally adjusted forecast model for these sales data. Forecast demand for each quarter for 2024 (using a linear trend line forecast estimate for sales in 2024).

Basic Economic Order Quantity Model

III. A local distributor for a national tire company expects to sell approximately 9,600 steel-belted radial tires of a certain size next year. Annual carrying cost is $16 per tire and ordering cost is $75.

Find:

1. What is the optimal order quantity?
2. Determine the total inventory cost.

IV. A flash drive manufacturer uses approximately 32000 silicon chips annually. The chips are used at a steady rate during the 240 days a year that the plant operates. Annual holding cost is $3 per chip, and ordering cost is $120. Determine

1. How much should we order each time to minimize our total cost?
2. How many times should we order in a year?
3. What is the total cost?

Economic Production Quantity Model

V. Lambda Optics makes microscope lens housings. Annual demand is 100,000 units per year. Assume that the product can be produced at the rate of 200,000 units per year. Each production run costs $5,000 to set up, and the variable production cost of each item is $10. The annual cost per dollar value of holding items of inventory is $0.20. Compute

1. Economic production quantity
2. The length of each production run
3. Cycle time
4. Total cost

VI. A toy manufacturer uses 48000 rubber wheels per year. The firm makes its own wheels at a rate of 800 per day. Carrying cost is $1 per wheel per year. Setup cost for a production run is $45. The firm operates 240 days per year. Determine the followings:

1. The optimal production quantity
2. Minimum total annual cost for carrying and setup.
3. Cycle time for the optimal production quantity
4. Production run time for the optimal production quantity.

Reference no: EM133737000

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