Task: Henderson Furniture sells reproductions of 18th century furniture. For a particular table, the assumptions of the inventory model with back orders are valid.
D = 200 tables per year
I = 25% per year
C = $800 per table
Co = $80 per order
Cb = $50 per table per year
The store is open 250 days a year.
Q1. What are the values for order quantity and number of planned back-orders that will minimize total cost?
Q2. What is the maximum inventory?
Q3. What is the cycle time?
Q4. What is total cost?