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    1) ABC Company imports cars with an average monthly demand of 10 units and standard deviation of 4 units. With a 90% service level and holding cost of $5 per unit, the backorder cost needed is calculated to be $X to ensure at least a 90% service level. 2) An item has annual demand of 24 units with holding cost of $25 per unit. With lead time of 1 month, fixed order cost of $15 and backorder cost of $150, the economic order quantity, reorder point, and average inventory are calculated. Changing the policy to a fixed order of 3 units and reorder point of 3 is commented on.

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    1) ABC Company imports cars with an average monthly demand of 10 units and standard deviation of 4 units. With a 90% service level and holding cost of $5 per unit, the backorder cost needed is calculated to be $X to ensure at least a 90% service level. 2) An item has annual demand of 24 units with holding cost of $25 per unit. With lead time of 1 month, fixed order cost of $15 and backorder cost of $150, the economic order quantity, reorder point, and average inventory are calculated. Changing the policy to a fixed order of 3 units and reorder point of 3 is commented on.

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    9 views1 page

    INVEN HW4 Rev1

    Uploaded by

    Phan Gia Nghi
    1) ABC Company imports cars with an average monthly demand of 10 units and standard deviation of 4 units. With a 90% service level and holding cost of $5 per unit, the backorder cost needed is calculated to be $X to ensure at least a 90% service level. 2) An item has annual demand of 24 units with holding cost of $25 per unit. With lead time of 1 month, fixed order cost of $15 and backorder cost of $150, the economic order quantity, reorder point, and average inventory are calculated. Changing the policy to a fixed order of 3 units and reorder point of 3 is commented on.

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    © All Rights Reserved
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    of 1

    INVENTORY MANAGEMENT – SEMESTER 01 – 2022-2023

    HOMEWORK 4

    Question 1:
    ABC Company imports sport cars and redistributes them in the Vietnam’s market. Monthly
    demand for the cars is normally distributed, with expected demand during lead time is 10 units,
    standard deviation is 4 units and one-month lead time. Holding cost is $5. What is the unit
    backorder cost to make sure that the service level is at least 90%?

    Question 2:
    Consider an item with D = 24 units per year; c = $125 per units; h = 0.2 * 125 = $25 per unit. The
    lead time is one month. Fixed order cost is $15, and unit backorder cost is $150. Demand during
    lead time is Poisson. Calculate:
    a) The EOQ,
    b) Reorder Point,
    c) Average Inventory On-hand.
    d) Consider we change the Policy (Q, r) to (3, 3), give your opinion regarding the new policy.

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