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The HA H.A.L.Computer

question 30

Essay

The H.A.L.Computer Store sells a printer for $200.Demand for this is constant during the year, and annual demand is forecasted to be 600 units.The holding cost is $20 per unit per year, while the cost of ordering is $60 per order.Currently, the company is ordering 12 times per year (50 units each time).There are 250 working days per year and the lead-time is 10 days.
(a)Given the current policy of ordering 50 units at a time, what is the total of the annual ordering cost and the annual holding cost?
(b)If the company used the absolute best inventory policy, what would the total of the ordering and holding cost be?
(c)What is the reorder point?


Definitions:

Service Level

A measure of the quality of service provided, often evaluated in terms of speed, reliability, and customer satisfaction.

Lead Time

The amount of time it takes from the initiation of a process until its completion, including the time taken for preparation, processing, and delivery.

Standard Deviation

A statistical measure of the dispersion or variation in a set of values, indicating how much the values diverge from the average of the set.

Safety Stock

Inventory kept on hand to protect against fluctuations in demand or supply, ensuring that there are no stockouts.

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