cost of holding one unit in inventory for a year: H 1.85 Q*= optimal quantity to order
338
2 )
∗ =√(
numbers of orders placed annually:N -> Annual Ordering Cost: D/Q*(S) Average cycle inventory level: Q*/2
15.68
313.67
169
Assumption: the mentioned inventory cost (21%) is per year
-> 12.99$*(1-0,32(percentage 12.99$*(1-0,32(percentage of the gross margin))*0,21 (cost of inventory)
->Annual Holding Cost: Q*/2 (H) Safety Stock (SS): for a service level of 95%: z
313.67
1.645
Standard deviation: σ
2.86356421
Lead time: L (in days)
14
= ∗ *√()
17.63
-> Annual Holding Cost for Safety Stock: SS(H)
32.69
Reorder point: R (R= d*L + SS; d=daily demand -> D/365) Total Annual Cost for inventory with an inventory system: C C= D/Q* (S)+ Q*/2 (H) + SS(H)
221.07
660.03
Costs without introducing an inventory system
EG151 Annual Ordering Cost: D/Lot Size*(S) (lot size: 150 according to the case) Average cycle inventory level: Q*/2.2
Annual Holding Cost: Q*/2.2 (H)
707.20
Assumption: we took 2.2 instead of 2, because we are running out of stock and thats why our average cycle inventory level must be 68 lower than 75; our denominator must be higher than 2 126.48
Assumption: Other costs due to a bad inventory system: costs of backorder (=loss of profit)
Projected number of backorders at the end of the year
11 parts after 21 weeks > 27,24 parts after 52 27.24 weeks
Projected costs of backorder at the end of the year
113.22 =27,24*12,99*32%
Total Annual Cost for inventory without an inventory system: C
946.90
-> the lost margin is our cost for backorders
Summery Total Inventory Costs
EG151
DB032
Total
Total Annual Cost for inventory without an inventory system:
946.90
509.98
1456.87
Total Annual Cost for inventory with an inventory system:
