Question 5: Interest rates drop, and Jacksons now

assumes that its carrying costs are 20%, rather than

30%. How will this change your answers to questions 2,
3, and 4, if at all? Explain.
Item Orders/s Order Reorder Item Orders/ Order Reorder
name Item ID etups size point
name Item ID setups size point
Item 1 402 26.0 8 101 Item 1 402 20.8 10 101
Item 2 940 38.5 27 102 Item 2 940 31.5 33 102
Item 3 660 20.1 31 164
Item 3 660 25.0 25 164
Item 4 829 18.4 85 162
Item 4 829 22.6 69 162 Item 5 301 38.7 47 183
Item 5 301 47.9 38 183 Item 6 447 39.6 63 212
Item 7 799 16.6 25 57
Item 6 447 48.9 51 212
Item 8 597 9.2 68 105
Item 7 799 20.8 20 57 Item 9 27 12.2 17 86
Item 8 597 11.1 56 105 Item 10 196 11.1 94 119
Item 9 27 14.9 14 86
Item 11 258 42.8 51 231
Item 12 62 15.8 592 1331
Item 10 196 13.5 77 119

Item 11 258 52.0 42 231

Item 12 62 19.3 484 1331

 Working Safety
Order cost Working Safety stock Item Order stock cost stock cost Total cost
Item name Item ID ($) stock cost ($) cost ($) Total cost ($) name Item ID cost ($) ($) ($) ($)
41,871.1 45,621.1
Item 1 402 1,950 1,800 4 4 Item 1 402 1,560.00 1,500.00 27,914.09 30,974.09
17,764.4 23,569.3
Item 2 940 2,889.89 2,916.00 2 1 Item 2 940 2,363.64 2,376.00 11,482.95 16,582.58
20,935.5 24,682.5
Item 3 660 1,872.00 1,875.00 7 7 Item 3 660 1,509.68 1,550.00 13,957.05 17,016.72

Item 4 829 678.26 672.75 2,565.97 3,916.98 Item 4 829 550.59 552.50 1,710.65 2,813.74
11,102.7 13,964.6
Item 5 301 1,436.84 1,425.00 6 0 Item 5 301 1,161.70 1,175.00 7,401.84 9,738.54
12,297.4
Item 6 447 1,468.24 1,453.50 9,375.67 0 Item 6 447 1,188.57 1,197.00 6,250.44 8,636.02

Item 7 799 624.00 600.00 2,960.74 4,184.74 Item 7 799 499.20 500.00 1,973.82 2,973.02

Item 8 597 334.29 336.00 976.99 1,647.28 Item 8 597 275.29 272.00 651.33 1,198.62

Item 9 27 445.71 441.00 5,181.29 6,068.00 Item 9 27 367.06 357.00 3,454.19 4,178.25

Item 10 196 405.19 404.25 1,036.26 1,845.70 Item 10 196 331.91 329.00 690.84 1,351.75
14,186.8 17,321.8
Item 11 258 1,560.00 1,575.00 6 6 Item 11 258 1,284.71 1,275.00 9,457.91 12,017.61
Item 12 62 580.17 580.80 2,763.35 3,924.32 Item 12 62 474.32 473.60 1,842.24 2,790.16
Total number of items 12
Jacksons Warehouse
AGGREGATE INVENTORY VALUES
Average working stock investment $46,93100
Inventory carrying charge = 30%
$435,736.
Service level = 95%
Average safety stock investment 70
$482,667.
Total inventory investment 70

$14,243.5
Cost of ordering EOQ items per year 9
$14,079.3
Average working stock carrying cost per year 0
$130,721.
Average safety stock carrying cost per year 00
$144,800.
Total inventory carrying cost per year 30
$159,043.
Total cost per year 90

Number of orders for EOQ items 341

Expected stockouts 17
Total number of items 12
Jacksons Warehouse
AGGREGATE INVENTORY VALUES
Average working stock investment $57,785.50 Inventory carrying charge = 20%
Average safety stock investment $435,736.70 Service level = 95%
Total inventory investment $493,522.20

Cost of ordering EOQ items per year $11,566.67

Average working stock carrying cost per year $11,557.10
Average safety stock carrying cost per year $87,147.35
Total inventory carrying cost per year $98,704.45
Total cost per year $110,271.10

Number of orders for EOQ items 277

Expected stockouts 14
Question 6:
Disregard your answers to questions 4 and 5.
Answer question 3 again, this time assuming
that Jacksons wants to keep enough of each SKU
to fill orders 90% of the time.
 Working stock Safety stock
Item name Item ID Order cost ($) cost ($) cost ($) Total cost ($)
Item 1 402 1,950.00 1,800.00 32,622.98 36,372.98
Item 2 940 2888.89 2916.00 13,840.76 19,645.65
Item 3 660 1,872.00 1,875.00 16,311.49 20,058.49
Item 4 829 678.26 672.75 1,999.22 3,350.23
Item 5 301 1,436.84 1,425.00 8,650.47 11,512.32
Item 6 447 1,468.24 1,453.50 7,304.84 10,226.58
Item 7 799 624.00 600.00 2,306.79 3,530.79
Item 8 597 334.29 336.00 761.20 1,431.49
Item 9 27 445.71 441.00 4,036.89 4,923.60
Item 10 196 405.19 404.25 807.38 1,616.82
Item 11 258 1,560.00 1,575.00 11,053.38 14,188.38
Item 12 62 580.17 580.80 2,153.01 3,313.97
 Total number of items 12
Jacksons Warehouse
AGGREGATE INVENTORY VALUES
Average working stock investment $46,931.00
Inventory carrying charge = 30%
Service level = 90% Average safety stock investment $339,494.70
Total inventory investment $386,425.70

Cost of ordering EOQ items per year $14,243.59

Average working stock carrying cost per year $14,079.30
Average safety stock carrying cost per year $101,848.40
Total inventory carrying cost per year $115,927.70
Total cost per year $130,171.30

Number of orders for EOQ items 341

Expected stockouts 34