Calculate the P (in workdays, rounded to the nearest day) that gives approximately the same number of orders per year as the EOQ. b) It is time to review the item. On-hand inventory is 40 mixers; receipt of 440 mixers is scheduled, and no backorders exist. How much should be reordered? c) What is the target inventory level, T? d) What is the total annual cost of the P system?
A regional distributor purchases discontinued appliances from various suppliers and
then sells them on demand to retailers in the region. The distributor operates 5 days
per week, 52 weeks per year. Only when it is open for business can orders be
received. The following data are estimated for the mixer:
Average daily demand (d) = 100 mixers
Standard deviation of daily demand (d) = 30 mixers
Lead time (L) = 3 days
Holding cost (H) = $9.40/unit/year
Ordering cost (S) = $35/order
4
Cycle-service level = 92 percent
Suppose that a periodic review (P) system is used at the distributor.
a) Calculate the P (in workdays, rounded to the nearest day) that gives
approximately the same number of orders per year as the EOQ.
b) It is time to review the item. On-hand inventory is 40 mixers; receipt of 440
mixers is
reordered?
c) What is the target inventory level, T?
d) What is the total annual cost of the P system?
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