Reference no: EM133524112
Parts Emporium Case Analysis
Answer the following questions for the "Parts Emporium" case:
1. What is the total annual cycle-inventory cost (i.e., holding cost + ordering cost) of the two parts, respectively, based on their current ordering quantity?
2. What is the economic order quantity (EOQ) for the two parts? What would be the total cost (i.e., holding cost + ordering cost) of the two parts, respectively, if they were to switch to EOQ? How are they different from the current costs?
3. What are the reorder points (R) for the two parts, respectively, if Sue were to adopt a continuous-review system (Q-system)?
4. What are the time between orders (P) and the target inventory (T) for the two parts, if Sue were to adopt a period-review system (P-system)?
5. Which ordering system (Q or P) would you recommend for each of the two parts? Why?