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Inventory Management - Sample Problems

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Jaycel Ongy
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58 views7 pages

Inventory Management - Sample Problems

r

Uploaded by

Jaycel Ongy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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EOQ=

√ 2 × Annual Demand ×Order Cost


Carrying Cost

EOQ=
√ 2 × 40,000units × P 60
P 10

EOQ=
√ P 4,800,000
P 10
EOQ=√ 480,000
EOQ=692.82units∨693 units

Total ordering cost = No. of orders x Ordering Cost

Total ordering cost = (Annual Demand / EOQ) x Ordering Cost

Total ordering cost = (40,000 units / 693 units) x P60

Total ordering cost = 57.72 x P60

Total ordering cost = P3,463.20

Total carrying cost = Ave. Inventory x Carrying Cost

Total carrying cost = (EOQ / 2) x Carrying Cost

Total carrying cost = (693 units / 2) x P10

Total carrying cost = 346.5 x P10

Total carrying cost = P3,465.00

Total cost = Total ordering cost + Total carrying costs

Total cost = P3,463.20 + P3,465

Total cost = P6,928.20


EOQ=
√ 2 × Annual Demand ×Order Cost
Carrying Cost

EOQ=
√ 2 ×(1,200units x 3)× P200
P 25

EOQ=
√ 2 ×3,600 units × P 200
P25

EOQ=
√ P 1,440,000
P 25
EOQ=√ 57,600
EOQ=240 units

Total ordering cost = No. of orders x Ordering Cost

Total ordering cost = (Annual Demand / EOQ) x Ordering Cost

Total ordering cost = (3,600 units / 240 units) x P200

Total ordering cost = 15 x P200

Total ordering cost = P3,000

Total carrying cost = Ave. Inventory x Carrying Cost

Total carrying cost = (EOQ / 2) x Carrying Cost

Total carrying cost = (240 units / 2) x P25

Total carrying cost = 120 x P25

Total carrying cost = P3,000

Total cost = Total ordering cost + Total carrying costs

Total cost = P3,000 + P3,000


Total cost = P6,000
Total safety stock = safety stock in quantity + safety stock in time

Safety stock in time = (maximum lead time – normal lead time) x daily demand

Safety stock in time = 10 days x (annual demand / no. of working days in a year)

Safety stock in time = 10 days x (100,000 units / 250 days)

Safety stock in time = 10 days x 400 units/day

Safety stock in time = 4,000 units

Reorder point = (lead time x daily demand) + total safety stock

Reorder point = (6 days x 400 units/day) + 4,000 units

Reorder point = 2,400 units + 4,000 units

Reorder point = 6,400 units

* what if maximum lead time is asked:

Delay = maximum lead time – normal lead time

10 days = MLT – 6 days

10 days + 6 days = MLT

16 days = MLT

** We can compute for the reorder point using the maximum lead time.

Reorder point = daily demand x maximum lead time

Reorder point = 400 units/day x 16 days


Reorder point = 6,400 units
ROP based on days:

Total safety stock = safety stock in quantity + safety stock in time

Safety stock in time = (maximum lead time – normal lead time) x daily demand

Safety stock in time = [ (6 weeks x 7 days) – (4 weeks x 7 days) ] x [ 10,000 units / (50 weeks x 7 days) ]
Safety stock in time = (42 days – 28 days) x (10,000 units / 350 days)

Safety stock in time = 14 days x 28.57 units/day

Safety stock in time = 399.99 units or 400 units

Reorder point = (daily demand x lead time) + total safety stock

Reorder point = (28.57 units/day x 28 days) + 400 units

Reorder point = 800 units + 400 units

Reorder point = 1,200 units

OR

ROP based on weeks:

Total safety stock = safety stock in quantity + safety stock in time

Safety stock in time = (maximum lead time – normal lead time) x weekly demand

Safety stock in time = (6 weeks – 4 weeks) x (10,000 units/ 50 weeks)


Safety stock in time = 2 weeks x 200 units/week

Safety stock in time = 400 units

Reorder point = (weekly demand x lead time) + total safety stock


Reorder point = (200 units/week x 4 weeks) + 400 units

Reorder point = 800 units + 400 units

Reorder point = 1,200 units

OR

** We can compute for the reorder point using the maximum lead time.

Reorder point = weekly demand x maximum lead time

Reorder point = 200 units/week x 6 weeks

Reorder point = 1,200 units

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