All rights are reserved. The material contained herein is the copyright property of Embry-Riddle Aeronautical University, Daytona Beach, Florida, 32114. No part of this material may be reproduced, stored in a retrieval system or transmitted in any form, electronic, mechanical, photocopying, recording or otherwise without the prior written consent of the University.
College of Business | worldwide.erau.edu
Problem Set 4
1. Apply ABC analysis for the following items:
|Item Number||Item Cost
2. Weekly demand for a product is 250 units with a standard deviation of 60 units (assume 52 weeks per year). Lead-time is 3 weeks. Calculate the safety stock and the reorder point for 98 percent service level.
3. Using the data below, find the EOQ, the total annual cost associated with the economic order quantity, the reorder point, number of orders per year and the time between orders.
|Annual Demand||15,600 units|
|Weeks Operating||52 weeks/year|
|Set up Cost||$60/order|
|Unit cost||$80 /unit|