MSCI432 Lecture Notes - Carrying Cost, Msci, Safety Stock
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MSCI 432/633: Production and Service Operations Management, Winter 2010
MSCI 432.001/633: Assignment # 3; MSCI 432.002: Assignment # 2
Q1. Discounting schemes.
a. Find the optimal ordering quantities for each of the items and the corresponding annual total cost.
[3 marks X3]
b. What is the primary difference between the ordering decisions made in a? Illustrate your answer
graphically. [2 marks]
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Q2. Limit on shelf life.
Simply find T
=EOQ/ߣ and if T
>SL then Q
Q3. Uncertain demand.
a. Assume that the firm has centralized all inventories in a single warehouse and that the probability
of stocking out in a cycle can still be no more than 5%. Ideally, how much average inventory can
the company now expect to hold, and at what cost? In this case, how long will a unit spend in the
warehouse before being sold? [5 marks]
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