RightChain Lots | Lot Size Optimization

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What are the fallacies in the EOQ formula and how should they be corrected? How could the EOQ formula be used in determining the issue pack size used to replenish retail stores from a distribution center? What other supply chain decisions can be based on the EOQ formula? What are the business conditions, product characteristics, and vendor qualifications for which vendor managed inventory programs would be appropriate? Suppose an item’s FAD = 14,000 cases/year; SUC = $2,000 per setup; UIV = $28.50; and ICR = 35%/year. a. What is the item’s EOQ? b. If there are 40 cases per pallet, how many pallets worth is the EOQ? c. How many days worth of product does the EOQ represent? d. What is the inventory value of the EOQ? e. If there is an inventory investment cap on the item of $60,000.00, what is the ELQ? f. If there is a 20% discount rate, what is the EOQ with discounts?

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RightChain™ Lots Exercises

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