ABC purchases 10,000 parts a year at a cost of $10 per part. These parts are used evenly throughout the year on a 300-day-per-year basis. It costs ABC $50 to place a single order and $0.50 to carry one part in inventory for a year.
The supplier of these parts usually delivers the parts within 10 days. Sometimes delivery can take as long as 12 days.
|
Delivery Time
(Days)
|
Percentage of
Occurrence
|
|
10
|
85
|
|
11
|
10
|
|
12
|
5
|
The maximum usage in any one-day is 60 and the minimum 40.
REQUIRED
- Compute EOQ
- What would be the reorder level?
- What would be the minimum level of stock?
- What would be the maximum level of stock?