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Question: Inventory Management Assume: Annual usage  &nb…

by | Nov 30, 2023 | Posted Questions



Inventory
Management
Assume:
Annual usage        1,200 units
Monthly Usage as follows:
J F M A M J J A S O N D
Alt A 100 100 100 100 100 100 100 100 100 100 100 100
Alt B 150 100 50 150 100 50 150 100 50 150 100 50
Alt C 50 100 150 50 100 150 50 100 150 50 100 150
Ordering Costs:
$100
Price Per Unit Cost Per unit
From To
0 50 $    1.20
51 100 $    1.14
101 150 $    1.12
151 200 $    1.09
201 500 $    1.05
501 1000 $    1.03
1001 over $    1.00
Cost of Inventory: $0.10 PER PERIOD
“Inventory” to be defined as:
“Beginning period inventory + Inventory Delivered
that period less inventory used that period”
“Costs” include: storage/physical rents; security;
movements (labor to move internally); interest expense; property
taxes)
No other costs are to be included
Design the most cost efficient
(annualized per unit cost) for each usage alternative.
(Assume no lead time; for
example, you can order 150 units in March, have them delivered in
March and satisfy March’s requirements)

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