Practical Management Science, Loose-leaf Version
5th Edition
ISBN: 9781305631540
Author: WINSTON, Wayne L.; Albright, S. Christian
Publisher: Cengage Learning
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Chapter 12, Problem 55P
In terms of K, D, and h, what is the average length of time that an item spends in inventory before being used to meet demand? Explain how this result can be used to characterize a fast-moving or slow-moving item.
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Your firm uses a periodic review system for all SKUS classified, using ABC analysis, as B or C
items. Further, it uses a continuous review system for all SKUS classified as A items. The
demand for a specific SKU, currently classified as an A item, has been dropping. You have been
asked to evaluate the impact of moving the item from continuous review to periodic review.
Assume your firm operates 52 weeks per year; the item's current characteristics are:
Demand (D) = 15,080 units/year
Ordering cost (S) = $125.00/order
Holding cost (H) = $3.00/unit/year
Lead time (L) = 5 weeks
Cycle service level = 95 percent
Demand is normally distributed, with a standard deviation of weekly demand of 64 units.
-Calculate the item's EOQ.
- Use the EOQ to define the parameters of an appropriate continuous review and periodie
review system for this item.
-Which system requires more safety stock and by how much?
-How do you think each system can affect your procurement procedures/methods?
Your firm uses a periodic review system for all SKUS classified, using ABC analysis, as B or C
items. Further, it uses a continuous review system for all SKUS classified as A items. The
demand for a specific SKU, currently classified as an A item, has been dropping. You have been
asked to evaluate the impact of moving the item from continuous review to periodic review.
Assume your firm operates 52 weeks per year; the item's current characteristics are:
Demand (D) = 15,080 units/year
Ordering cost (S) = $125.00/order
Holding cost (H) = $3.00/unit/year
Lead time (L) = 5 weeks
Cycle service level = 95 percent
Demand is normally distributed, with a standard deviation of weekly demand of 64 units.
1- How do you think each system can affect your procurement procedures/methods?
Your firm uses a periodic review system for all SKUs classified, using ABC analysis, as B or C items. Further, it uses a continuous review system for all SKUs classified as A items. The demand for a specific SKU, currently classified as an A item, has been dropping. You have been asked to evaluate the impact of moving the item from continuous review to periodic review. Assume your firm operates 52 weeks per year; the item’s current characteristics are:Demand 1D2 = 15,080 units/yearOrdering cost 1S2 = $125.00/orderHolding cost 1H2 = $3.00/unit/yearLead time 1L2 = 5 weeksCycle@service level = 95 percentDemand is normally distributed, with a standard deviation of weekly demand of 64 units.a. Calculate the item’s EOQ.b. Use the EOQ to define the parameters of an appropriate continuous review and periodic review system for this item.c. Which system requires more safety stock and by how much?
Chapter 12 Solutions
Practical Management Science, Loose-leaf Version
Ch. 12.4 - Prob. 1PCh. 12.4 - Prob. 2PCh. 12.4 - Prob. 3PCh. 12.4 - Prob. 4PCh. 12.4 - Prob. 5PCh. 12.4 - Prob. 6PCh. 12.4 - Prob. 7PCh. 12.4 - Prob. 8PCh. 12.4 - Prob. 9PCh. 12.4 - Prob. 10P
Ch. 12.4 - Prob. 11PCh. 12.5 - Prob. 12PCh. 12.5 - Prob. 13PCh. 12.5 - Prob. 14PCh. 12.5 - Prob. 15PCh. 12.5 - Prob. 16PCh. 12.5 - Prob. 17PCh. 12.5 - Prob. 18PCh. 12.5 - Prob. 19PCh. 12.5 - Prob. 20PCh. 12.5 - Prob. 21PCh. 12 - Prob. 27PCh. 12 - Prob. 28PCh. 12 - Prob. 29PCh. 12 - Prob. 30PCh. 12 - Prob. 31PCh. 12 - Prob. 32PCh. 12 - Prob. 33PCh. 12 - Prob. 34PCh. 12 - Prob. 35PCh. 12 - Prob. 36PCh. 12 - Prob. 38PCh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 12 - Prob. 42PCh. 12 - Prob. 43PCh. 12 - Prob. 44PCh. 12 - Prob. 45PCh. 12 - Prob. 46PCh. 12 - Prob. 47PCh. 12 - Prob. 48PCh. 12 - Prob. 49PCh. 12 - Prob. 53PCh. 12 - Prob. 54PCh. 12 - In terms of K, D, and h, what is the average...Ch. 12 - Prob. 56PCh. 12 - Prob. 57PCh. 12 - Prob. 58PCh. 12 - Prob. 59PCh. 12 - Prob. 60PCh. 12 - Prob. 61PCh. 12 - Prob. 62PCh. 12 - Prob. 63PCh. 12 - Prob. 64PCh. 12 - Prob. 65PCh. 12 - Prob. 66PCh. 12 - Prob. 67PCh. 12 - Prob. 68PCh. 12 - Prob. 69PCh. 12 - Prob. 70PCh. 12 - Prob. 71PCh. 12 - Prob. 1.1CCh. 12 - Prob. 1.2CCh. 12 - Prob. 1.3C
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