Cycle Inventory Examples Example 1: Demand for the Deskpro computer at Best Buy is 1,000 units per month.Best Buy incurs a fixed order placement,transportation,and receiving cost of $4,000 each time an order is placed.Each computer costs Best Buy $500 and the retailer has a holding cost of 20 percent.Evaluate the number of computers that the store manager should order in each replenishment lot. Example 2: The store manager at Best Buy would like to reduce the optimal lot size from 980 to 200.For this lot size reduction to be optimal,the store manager wants to evaluate how much the ordering cost per lot should be reduced. Example 3: Best Buy sells three models of computers,the Litepro,the Medpro,and the Heavypro.Annual demands for the three products are D=12,000 for the Litepro.Dy 1,200 units for the Medpro.and DH =120 units for the Heavypro.Each model costs Best Buy $500.A fixed transportation cost of $4,000 is incurred each time an order is delivered.For each model ordered and delivered on the same truck.an additional fixed cost of $1.000 is incurred for receiving and storage.Best Buy incurs a holding cost of 20 percent.Evaluate the lot sizes that the Best Buy manager should order if lots for each product are ordered and delivered independently.Also evaluate the annual cost of such a policy. Example 4: Consider the Best Buy data in Example 3.The three product managers have decided to aggregate and order all three models each time they place an order.Evaluate the optimal lot size for each model. Example 5: Consider the Best Buy data in Example 11-3.Product managers have decided to order jointly,but to be selective about which models they include in each order.Evaluate the ordering policy and costs using the procedure discussed previously Example 6: Drugs Online(DO)is an online retailer of prescription drugs and health supplements.Vitamins represent a significant percentage of its sales.Demand for vitamins is 10,000 bottles per month.DO incurs a fixed order placement,transportation,and receiving cost of $100 each time an order for vitamins is placed with the manufacturer.DO incurs a holding cost of 20 percent.The manufacturer uses the following all unit discount pricing schedule.Evaluate the number of bottles that the DO manager should order in each lot. Order Quantity Unit Price 0-4,999 53.00 5,000-9,999 $2.96 10,000 or more 52.92
Cycle Inventory Examples Example 1: Demand for the Deskpro computer at Best Buy is 1,000 units per month. Best Buy incurs a fixed order placement, transportation, and receiving cost of $4,000 each time an order is placed. Each computer costs Best Buy $500 and the retailer has a holding cost of 20 percent. Evaluate the number of computers that the store manager should order in each replenishment lot. Example 2: The store manager at Best Buy would like to reduce the optimal lot size from 980 to 200. For this lot size reduction to be optimal, the store manager wants to evaluate how much the ordering cost per lot should be reduced. Example 3: Example 4: Consider the Best Buy data in Example 3. The three product managers have decided to aggregate and order all three models each time they place an order. Evaluate the optimal lot size for each model. Example 5: Consider the Best Buy data in Example 11-3. Product managers have decided to order jointly, but to be selective about which models they include in each order. Evaluate the ordering policy and costs using the procedure discussed previously. Example 6: Drugs Online (DO) is an online retailer of prescription drugs and health supplements. Vitamins represent a significant percentage of its sales. Demand for vitamins is 10,000 bottles per month. DO incurs a fixed order placement, transportation, and receiving cost of $100 each time an order for vitamins is placed with the manufacturer. DO incurs a holding cost of 20 percent. The manufacturer uses the following all unit discount pricing schedule. Evaluate the number of bottles that the DO manager should order in each lot
Example 7: Demand for vitamins is 10,000 bottles per month.DO incurs a fixed order placement,transportation, and receiving cost of $100 each time it places an order for vitamins with the manufacturer.DO incurs a holding cost of 20 percent.The manufacturer charges $3 for each bottle of vitamins purchased.Evaluate the optimal lot size for DO.Each time DO places an order,the manufacturer has to process,pack,and ship the order.The manufacturer has a line packing bottles at a steady rate that matches demand.The manufacturer incurs a fixed-order filling cost of $250,production cost of $2 per bottle,and a holding cost of 20 percent.What is the annual fulfillment and holding cost incurred by the manufacturer as aresult of DO's ordering policy? Example 8: Consider the data from Example 7.Design a suitable quantity discount that gets DO to order in lots of 9,165 units when it aims to minimize only its own total costs
Example 7: Demand for vitamins is 10,000 bottles per month. DO incurs a fixed order placement, transportation, and receiving cost of $100 each time it places an order for vitamins with the manufacturer. DO incurs a holding cost of 20 percent. The manufacturer charges $3 for each bottle of vitamins purchased. Evaluate the optimal lot size for DO. Each time DO places an order, the manufacturer has to process, pack, and ship the order. The manufacturer has a line packing bottles at a steady rate that matches demand. The manufacturer incurs a fixed-order filling cost of $250, production cost of $2 per bottle, and a holding cost of 20 percent. What is the annual fulfillment and holding cost incurred by the manufacturer as aresult of DO’s ordering policy? Example 8: Consider the data from Example 7. Design a suitable quantity discount that gets DO to order in lots of 9,165 units when it aims to minimize only its own total costs
