The biggest inventory problem at the Barko facility is the storage of boom sections for their various Knuckleboom models. There are two types of boom sections: short and long. The following table outlines the demand in the next 5 months and the projected purchase price for each type of boom section.
|
Demand
|
May
|
June
|
July
|
August
|
September
|
|
Short booms
|
35
|
30
|
20
|
29
|
16
|
|
Long booms
|
37
|
11
|
16
|
33
|
10
|
|
Storage capacity
|
50
|
46
|
46
|
42
|
42
|
|
Purchase price
|
|
|
|
|
|
|
Short booms
|
$850
|
$800
|
$900
|
$950
|
$900
|
|
Long booms
|
$1,050
|
$1,100
|
$1,200
|
$1,200
|
$1,150
|
Due to the current storage rack system, each type of boom consumes the same amount of storage capacity and they can store up to 35. The carrying cost is 2.5% of the purchase price for that month. Currently there are 15 short booms and 18 long booms on hand. They can order up to 40 of each type each month. Create an Excel model to determine the optimum ordering strategy.