e. Suppose that the lead time for the delivery of cameras is still 0.2 weeks. However, rather than placing an order when B&H’s inventory of cameras reaches its reorder point calculated in part d above, B&H decides to place a new order for cameras whenever it has 60 cameras in inventory. How much additional holding costs (over the EOQ holding costs) will B&H incur as a result of this ordering policy? (Suppose that B&H orders according to the EOQ level each time that it places an order.) f. [Extra Credit] Suppose now that the lead time for the delivery of a shipment of cameras increases to 0.5 weeks. Assuming that B&H orders according to its optimal order quantity from part c above, what should be B&H’s reorder point for a shipment of cameras? Explain carefully your answer.
Please complete the sup part:
e,f and g.
1.B&H needs to decide how to manage its inventory of cameras. The demand for cameras at B&H is 200 cameras per week. Each time that B&H places an order for a new shipment of cameras, it must pay $80 in fixed processing fees. A camera costs B&H $60 to purchase. The cost for B&H to hold a camera in its store for one week is $4. Assume that the lead time for the delivery of a camera is 0 weeks.
a. Suppose that B&H places orders for cameras in quantities of 50 cameras at a time and places a new order for cameras each time that it runs out. Draw a graph showing the number of cameras that B&H has on-hand in inventory at each point in time up until the time when it places its fourth-order. Label the points in time at which B&H places a new order. Assume that B&H places its first order for 50 cameras on day 0.
b. Suppose again that B&H places orders for 50 cameras at a time. What will be B&H’s average holding costs per week? What will be B&H’s average fixed ordering costs per week?
c. What is the optimal number of cameras for B&H to order each time that it places an order? Assuming that B&H orders according to its optimal ordering quantity (EOQ), what will be B&H’s average fixed ordering costs over the course of a week? What will be B&H’s average holding costs over the course of a week?
d. Suppose now that the lead time for the delivery of a shipment of cameras increases to 0.2 weeks. Assuming that B&H orders according to its optimal order quantity from part c above, what should be B&H’s reorder point for a shipment of cameras?
e. Suppose that the lead time for the delivery of cameras is still 0.2 weeks. However, rather
than placing an order when B&H’s inventory of cameras reaches its reorder point calculated in part d above, B&H decides to place a new order for cameras whenever it has 60 cameras in inventory. How much additional holding costs (over the EOQ holding costs) will B&H incur as a result of this ordering policy? (Suppose that B&H orders according to the EOQ level each time that it places an order.)
f. [Extra Credit] Suppose now that the lead time for the delivery of a shipment of cameras increases to 0.5 weeks. Assuming that B&H orders according to its optimal order quantity from part c above, what should be B&H’s reorder point for a shipment of cameras? Explain carefully your answer.
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