33:136:386 Chapter Notes - Chapter 8: Carrying Cost, Fixed Cost, Stockout

• School: Rutgers University
• Department: Business Analytics and Information Technology
• Course: 33:136:386
• Professor: Markowitz

Document Summary

Two orders of q* = 400 are outstanding. The on-hand inventory reorder point is 900 2(400) = 100. = 1095. 45: q* = 2 dco. = 2 ( 12000)( 25 ) ( . 20) ( 2. 50: r = dm = (1200/250)*(5) = 240, t = 250q*/d = 250(1095. 45)/12000 = 22. 82, holding: (1/2)q*ch = (1095. 45)(. 20)(2. 50) = 273. 86. Total cost = (1/2)(1000)(. 20)(2. 50) + (12000/1000)(25) = 250 + 300 = . The cost increase of using q = 1000 is only - . 72 = . 28. Thus the order quanity of 1000 is acceptable r = dm = (12000/250)(50) = 240 (unchanged: annual demand d = (5/month)(12 months) = 6= Ordering costs = fixed cost per class = ,000. D/q* = 60/12 = 5 classes per year. Driver holding cost = qch = (12)(19,200) = ,200. Class holding cost = (d/q)co = (60/12)(22,000) = ,000. Total cost = ,200: a. q* = 2 dco.