Inventory Management Problems

1) Find the economic order quantity and the reorder point, given

Annual demand (D) = 1000 units

Average daily demand ¿) = 1000/365
Ordering cost (S) = Rs 5 per order
Holding cost (H) = Rs 1.25 per unit per year
Lead time (L) = 1 week
Cost per unit (C) = Rs 12.50

2) Ricky Oranges’s annual demand is 12,500 units. Ordering cost is $100 per order. Holding
cost is estimated at 20% of product cost which is $50 per unit. What is the number of
orders per year using EOQ to compute the best quantity to order ? What is the annual
holding cost ? What is the reorder point ? Assume four weeks per month, lead time L is
one week and demand rate is 250 units per week.

3) You are inventory manager of Diego Supplies Inc. You computed the EOQ to be 500
units. Annual demand for the company is 5,000 units and holding cost is $4 per unit.
What is the ordering cost per order and total inventory cost?

4) G-Tech’s monthly demand is 250 units. You are in charge of the inventory department.
You know that the holding cost is $60 per unit and ordering cost is $100 per order. What
is the EOQ ? What is the number of orders per year ? What is the annual holding cost? If
lead time L is seven days and demand rate is 60 units per week, what is the ROP ?