TUTORIAL TOPIC 6: INVENTORY

PART A
JANUARY 2012

D 10,000
Co RM 45
Ch RM 0.10
EOQ

2 DCo
Ch

2(10000)( 45)
0.10
3000 units

No. of orders

D 10000

Q 3000
3.33 times

APRIL 2011
D = 8000
Co = 500 / order
P = 800 / unit
Ch = 6.25 % P
a) N =
10 =

D
Q
8000
Q

Q = 800 units
b) RoP = d X L
=

8000
50

x4

= 640 units
c) EOQ =

2 DCo
Ch

2 ( 8000 ) (500)
6.25 ( 800)

= 400 units

8000
(500) +
400

TC =

400
2

(50) + 800 (8000)

= RM 6420000

OCTOBER 2010
P1 = 16 / unit
1000 ,

P2 = 15,20 / unit

Co = 200 / order
Ch = 0.15 P
d = 2000
D = 2000 x 52
= 104000
EOQ1 =

2 ( 104000 ) (20)
0.15(16)

2(104000)(200)
0.15(15,20)

= 4163.33 units
undefined/undetermined.
EOQ2 =

= 4271.49 units
TC (4271) =

104000
4271.49

(200) +

4271.49
2

(0.15 x 15,20) + 15,20 (104000)

= RM 1,590,539
Should order 4271.49 units, meaning, take the discount offer.

APRIL 2010
NONE

OCTOBER 2009
d = 500
D = 500 x 12
= 6000
P = 2000
Cs = 2000
P = 40
Ch = 0.2 x 40
=8

i) EBQ =

20Cs

d
Ch(1 )
p
2(6000)(2000)
500
8 (1
)
2000

= 2000 units
ii) TC =

D
Q

Cs +

6000
2000

(2000) +

= RM 252000
iii) N =

D
Q
6000
2000

= 3 times

Q
2

Ch (1 -

2000
2

d
p

) + PD

(8)(1-

500
2000

) + 40(6000)

APRIL 2009
a) True
b) True

D = 2000
Co = 50
P = 13.50
Ch = 0.20 P

EOQ =

2 ( 2000 ) (50 )
0.2 ( 13.50 )

= 272.16 bags

TC =

2000
272.16

(51) +

= RM 27, 734.85

N=

D
Q

272.16
2

(0.2 x 13.50) + (13.50)(2000)

2000
272.16

= 7.4 times

PART B
JANUARY 2012
a) i. determine the economic order quantity

EOQ

2(120)45
15 units
0.24(200)

ii. should management accept the offer?

Cnew = 0.99 (200) = RM 198

At Q = 15, TC =

(120 x 200)

At Q = 100, TC =

120
15
(45)
(0.24 x 200) RM 24720
15
+ 2

(120 x198)

120
100
(45)
(0.24 x198) RM 26190
100
+ 2

No, the management should not accept the offer.

b) EBQ = 600;C = RM300;
p=30/day; d=300/30 = 10/day;
Ch=0.25C; D=300x12 = 3600
i.

The length of a production run

Q 600

20 days
p
30
ii.

The maximum inventory, in units

d
30

Q 1 600 1 400 units

p
10

iii.

The setup cost

EBQ

2(3600)Cs
600
10

0.25(300) 1
30

144Cs 360000
Cs RM 2500

iv.

The total yearly inventory cost

TC (3600 x300)

3600
600
10

(2500)
(0.25)(300) 1 RM 1,110,000
600
2
30

APRIL 2011
NONE

OCTOBER 2010
NONE

APRIL 2010
a)

D = 10000
P = 50 / unit
Co = 25 / order
Ch = 5 % P
L = 5 days

i) EOQ =

2 ( 10000 )( 25 )
0.05 ( 50 )

= 447.2 units

ii) ROP = d x L

10000
250

x5

= 200 units

iii) N =

D
Q
10000
447.2

= 22.36 times

iv) T =

Q
D
447.2
10000

= 0.045 years

TC =

10000
447.2

(25) +

= RM 501 118.03

b)

Co = 90 / order
Ch = 0.2 P
D = 5000

EOQ1 =

2 ( 5000 ) ( 90 )
0.2 ( 25 )

= 424

447.2
2

(0.05 x 50) + 50 ( 10000)

EOQ2 =

2 ( 5000 ) ( 90 )
0.2 ( 24.75 )

=426.4 adjust to 1000

EOQ3 =

2 ( 5000 ) ( 90 )
0.2 ( 24.25 )

= 431 adjust to 2000

TC (424.3) =

5000
424.3

424.3
2

(90) +

(0.2 x 25) + 25 ( 5000)

= RM 127, 121.32

5000
1000

TC (1000) =

(90) +

1000
2

(0.2 x 24.75) + 24.75 ( 5000)

= RM 126, 675

TC (2000) =

5000
2000

(90) +

= RM 126, 325

Should order 2000 units

OCTOBER 2009
NONE

APRIL 2009
NONE

2000
2

(0.2 x 24.25) + 24.25 ( 5000)