A

1
2
3

Part (b): EOQ Model

Joshua Stevens

MS 5023
Due: April 18, 2016

DATA

6
7
9

Demand
Cost

10

Cost of Ordering

11

Carrying/ Holding Cost

Lead Time
Days in Year
Days in Week

12
13
14
15
16
17
18
19
20

=((D8/D13)*D12)

Variable Amount Explanation (units)

D
3,000 toothbrushes/ year
C
1.25
$ per toothbrush
Co
6.25
$ per each order
Cc
0.15
$ per toothbrush/year
L

6
360
7

days of lead time

days/ year (for simplification)
days/week

By simply changing the lead time

to "6", the reorder point will update
(as noted in the "CALCULATIONS"
to the right.

CALCULATIONS
Reorder point
Optimal order quantity

Variable Amount Explanation (units)

R
50.00 inventory level when order is placed
Qopt
500.00 toothbrushes/order
=SQRT((2*D10*D8)/D11)

# orders or cycles/ year

Time between orders
Annual carrying/ holding cost
Annual ordering cost

6.00
8.57
37.50
37.50

cycles (or orders)/ year

Total annual variable inventory cost

75.00

$/year

weeks
$/year
$/year

=(D8/I10)
=((I10/D8)*(D13)/D14)
=D11*(I10/2)
=D10*(D8/I10)

=I14+I15

21

MS 5023: Case Problem 3

D12:

By simply changing the lead time to "6", the reorder point will update (as noted in the "CALCULATIONS" to the right.

I9:

=((D8/D13)*D12)

I10:

=SQRT((2*D10*D8)/D11)

I12:

=(D8/I10)

I13:

=((I10/D8)*(D13)/D14)

I14:

=D11*(I10/2)

I15:

=D10*(D8/I10)

I17:

=I14+I15

MS 5023: Case Problem 3

1
2

Part (e): EOQ Model

3
4

Joshua Stevens

MS 5023
Due: April 18, 2016

7
8
9

Demand
Cost

10

Cost of Ordering

11

Carrying/ Holding Cost

Lead Time
Days in Year
Days in Week

12
13
14
15
16
17

=((D8/D13)*D12)

DATA

Variable Amount Explanation (units)

D
3,000 toothbrushes/ year
C
1
$ per toothbrush
Co
6.25
$ per each order
Cc
0.15
$ per toothbrush/year
L

6
360
7

We change the cost to

$1.00/ unit.

days of lead time

days/ year (for simplification)
days/week

CALCULATIONS
Reorder point
Optimal order quantity

Variable
R
Qopt

Amount Explanation (units)

50.00 inventory level when order is placed
1,000.00 toothbrushes/order
The Qopt is manully typed in as

"1,000" because we have already

done the arithmetic on paper.

# orders or cycles/ year

Time between orders
Annual carrying/ holding cost
Annual ordering cost

3.00
17.14
75.00
18.75

Total annual variable inventory cost

93.75

18
19
20

cycles (or orders)/ year

weeks
=(D8/I10)
$/year
$/year

=((I10/D8)*(D13)/D14)

$/year

=D10*(D8/I10)

=D11*(I10/2)

=I14+I1
5

MS 5023: Case Problem 3

D9:

We change the cost to $1.00/ unit.

I9:

=((D8/D13)*D12)

I10:

The Qopt is manully typed in as "1,000" because we have already done the arithmetic on paper.

I12:

=(D8/I10)

I13:

=((I10/D8)*(D13)/D14)

I14:

=D11*(I10/2)

I15:

=D10*(D8/I10)

I17:

=I14+I15

MS 5023: Case Problem 3

1
2
3

Part (a): EOQ Model

Joshua Stevens

MS 5023
Due: April 18, 2016

7
9

Demand
Cost

10

Cost of Ordering

11

Carrying/ Holding Cost

Lead Time
Days in Year
Days in Week

12
13
14
15

=((D8/D13)*D12)

DATA

Variable Amount Explanation (units)

D
3,000 toothbrushes/ year
C
1.25
$ per toothbrush
Co
6.25
$ per each order
Cc
0.15
$ per toothbrush/year
L

0
360
7

days of lead time

days/ year (for simplification)
days/week

CALCULATIONS
Reorder point
Optimal order quantity

Variable Amount Explanation (units)

R
0.00
inventory level when order is placed
Qopt
500.00 toothbrushes/order
=SQRT((2*D10*D8)/D11)

# orders or cycles/ year

Time between orders
Annual carrying/ holding cost
Annual ordering cost

6.00
8.57
37.50
37.50

cycles (or orders)/ year

$/year
$/year

=((I10/D8)*(D13)/D14)

Total annual variable inventory cost

75.00

$/year

=D10*(D8/I10)

weeks

16
17
18
19
20

=(D8/I10)

=D11*(I10/2)

=I14+I1
5

MS 5023: Case Problem 3

I9:

=((D8/D13)*D12)

I10:

=SQRT((2*D10*D8)/D11)

I12:

=(D8/I10)

I13:

=((I10/D8)*(D13)/D14)

I14:

=D11*(I10/2)

I15:

=D10*(D8/I10)

I17:

=I14+I15

MS 5023: Case Problem 3

1
2

Part (d)-ii: EOQ Model

3
4

Joshua Stevens

MS 5023
Due: April 18, 2016

=((D8/D14)*D13)

DATA

CALCULATIONS

Variable Amount Explanation (units)

D
3,000 toothbrushes/ year
C
1.25
$ per toothbrush

Variable
R
Rs

7
8

Demand

Cost

10

Cost of Ordering

Co

6.25

$ per each order

Optimal order quantity

Qopt

11

Carrying/ Holding Cost

Cc

0.15

$ per toothbrush/year

Optimal shortage level

Sopt

12

Cost of Shortage
Lead Time
Days in Year
Days in Week

Cs

25
6
360
7

$ per toothbrush/year
days of lead time

Maximum Inventory Level

13
14
15
16
17
18

Reorder point
Reorder point (with shortage)

501.50 toothbrushes/order =SQRT((2*D10*D8)/D11)*

SQRT((D11+D12)/D12)
2.99
toothbrushes
=(D11/(D11+D12))*(I10)

498.51 maximum amount toothbrushes that will be in inventory

at one time

days/ year (for simplification)

days/week

The only item changed in this spreadsheet was the value of

"D12" when compared to spreadsheet "Part (c)". This value is
the highest of the possible range of per-unit costs of shortage.

=(I8-I11)

Amount Explanation (units)

50.00 inventory level when order is placed
47.01 inv. level when order is placed (allowing shortage)

Annual carrying/ holding costs

Annual ordering costs
Annual total shortage costs
Total annual variable inventory cost

19
20

37.17
37.39
0.22
74.78
=I15+I16+I17

21

MS 5023: Case Problem 3

$/year
$/year
$/year
$/year

=(I10-I11)
=(D11*(((I10-I11)^2)/(2*I10)))

=(D10*(D8/I10))
=(D12*((I11^2)/(2*I10)))

D12:

The only item changed in this spreadsheet was the value of "D12" when compared to spreadsheet "Part (c)". This value is the highest of the possible range of per-unit costs of shortage.

I8:

=((D8/D14)*D13)

I9:

=(I8-I11)

I10:

=SQRT((2*D10*D8)/D11)*SQRT((D11+D12)/D12)

I11:

=(D11/(D11+D12))*(I10)

I13:

=(I10-I11)

I15:

=(D11*(((I10-I11)^2)/(2*I10)))

I16:

=(D10*(D8/I10))

I17:

=(D12*((I11^2)/(2*I10)))

I18:

=I15+I16+I17

MS 5023: Case Problem 3

1
2

Part (d)-i: EOQ Model

3
4

Joshua Stevens

MS 5023
Due: April 18, 2016

=((D8/D14)*D13)

DATA

CALCULATIONS

Variable Amount Explanation (units)

D
3,000 toothbrushes/ year
C
1.25
$ per toothbrush

Variable
R
Rs

7
8

Demand

Cost

10

Cost of Ordering

Co

6.25

$ per each order

Optimal order quantity

Qopt

11

Carrying/ Holding Cost

Cc

0.15

$ per toothbrush/year

Optimal shortage level

Sopt

12

Cost of Shortage
Lead Time
Days in Year
Days in Week

Cs

0.85
6
360
7

$ per toothbrush/year
days of lead time

Maximum Inventory Level

13
14
15
16
17
18

Reorder point
Reorder point (with shortage)

542.33 toothbrushes/order =SQRT((2*D10*D8)/D11)*

SQRT((D11+D12)/D12)
81.35 toothbrushes
=(D11/(D11+D12))*(I10)

460.98 maximum amount toothbrushes that will be in inventory

at one time

days/ year (for simplification)

days/week

The only item changed in this spreadsheet was the value of

"D12" when compared to spreadsheet "Part (c)". This value is
the lowest of the possible range of per-unit costs of shortage.

=(I8-I11)

Amount Explanation (units)

50.00 inventory level when order is placed
-31.35 inv. level when order is placed (allowing shortage)

Annual carrying/ holding costs

Annual ordering costs
Annual total shortage costs
Total annual variable inventory cost

19
20

29.39
34.57
5.19
69.15
=I15+I16+I17

21

MS 5023: Case Problem 3

$/year
$/year
$/year
$/year

=(I10-I11)
=(D11*(((I10-I11)^2)/(2*I10)))

=(D10*(D8/I10))
=(D12*((I11^2)/(2*I10)))

D12:

The only item changed in this spreadsheet was the value of "D12" when compared to spreadsheet "Part (c)". This value is the lowest of the possible range of per-unit costs of shortage.

I8:

=((D8/D14)*D13)

I9:

=(I8-I11)

I10:

=SQRT((2*D10*D8)/D11)*SQRT((D11+D12)/D12)

I11:

=(D11/(D11+D12))*(I10)

I13:

=(I10-I11)

I15:

=(D11*(((I10-I11)^2)/(2*I10)))

I16:

=(D10*(D8/I10))

I17:

=(D12*((I11^2)/(2*I10)))

I18:

=I15+I16+I17

MS 5023: Case Problem 3

1
2

Part (c): EOQ Model

3
4

Joshua Stevens

MS 5023
Due: April 18, 2016

=((D8/D14)*D13)

DATA

CALCULATIONS

Variable Amount Explanation (units)

D
3,000 toothbrushes/ year
C
1.25
$ per toothbrush

Variable
R
Rs

7
8

Demand

Cost

10

Cost of Ordering

Co

6.25

$ per each order

Optimal order quantity

Qopt

11

Carrying/ Holding Cost

Cc

0.15

$ per toothbrush/year

Optimal shortage level

Sopt

12

Cost of Shortage
Lead Time
Days in Year
Days in Week

Cs

1.5
6
360
7

$ per toothbrush/year
days of lead time

Maximum Inventory Level

13
14
15
16
17
18

Reorder point
Reorder point (with shortage)

524.40 toothbrushes/order =SQRT((2*D10*D8)/D11)*

SQRT((D11+D12)/D12)
47.67 toothbrushes
=(D11/(D11+D12))*(I10)

476.73 maximum amount toothbrushes that will be in inventory

at one time

days/ year (for simplification)

days/week

=(I8-I11)

Amount Explanation (units)

50.00 inventory level when order is placed
2.33
inv. level when order is placed (allowing shortage)

Annual carrying/ holding costs

Annual ordering costs
Annual total shortage costs
Total annual variable inventory cost

19
20

32.50
35.75
3.25
71.51
=I15+I16+I17

21

MS 5023: Case Problem 3

$/year
$/year
$/year
$/year

=(I10-I11)
=(D11*(((I10-I11)^2)/(2*I10)))

=(D10*(D8/I10))
=(D12*((I11^2)/(2*I10)))

I8:

=((D8/D14)*D13)

I9:

=(I8-I11)

I10:

=SQRT((2*D10*D8)/D11)*SQRT((D11+D12)/D12)

I11:

=(D11/(D11+D12))*(I10)

I13:

=(I10-I11)

I15:

=(D11*(((I10-I11)^2)/(2*I10)))

I16:

=(D10*(D8/I10))

I17:

=(D12*((I11^2)/(2*I10)))

I18:

=I15+I16+I17

MS 5023: Case Problem 3