lec 4 handQuestion 1: Sharp Inc manufacturers and supplies painless hypodermic needles. They would like to minimize their inventory costs by determining the optimal number of hypodermic needles to obtain per order. Their annual demand is 1000 units with a set up or ordering cost of $10 per order and a holding cost of $0.50 per unit per year. Assume that each needle costs $10 to purchase. Lead time is 5 working days.
Calculate
a. Optimal order quantity per order (EOQ)

EOQ=Q*=Squareroot((2*(1000)*(10))/0.5 )=200

b. Minimum total annual inventory costs

Total Cost= 10*1000+(1000/200)*10+(200/2)*0.5=10102.325

c. The number of orders per year

N=1000/200=5

d. The time between orders
T=360/5=72
e. The reorder point assuming 250 working days d=D/# of working days
ROP=(1000/250)*5=20

Question 2: AV City stocks and sells a particular brand of laptop. It costs the firm $625 each time it places an order with the manufacturer for the laptops. The cost of carrying one laptop in inventory for a year is $130. The store manager estimates that total annual demand for the laptops will be 1500 units, with a constant demand rate throughout the year. Orders are received within 2 days after placement from a local warehouse maintained by the manufacturer. The store policy is never to have stock outs of the laptops. The store is open for business every day of the year except Christmas Day. Each laptop costs $750.

Determine the following:

a. Optimal order quantity per order (EOQ) b. Minimum total annual inventory costs c. The number of orders per year d. The time between orders e. The reorder point

Question 3: The Ambrosia Bakery makes cakes for freezing and subsequent sale. The bakery, which operates five days a week, 52 weeks a year, produce cakes at the rate of 116 cakes per day. The bakery sets