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The document provides calculations for the economic order quantity (EOQ) and reorder point for a lamp with specific cost and demand parameters. The total demand over 24 months is 10,800 lamps, resulting in an EOQ of 900 lamps and approximately 6 orders per year. The mean monthly demand is 450 lamps, leading to a time between orders of about 2 months.

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21 views2 pages

Inv

The document provides calculations for the economic order quantity (EOQ) and reorder point for a lamp with specific cost and demand parameters. The total demand over 24 months is 10,800 lamps, resulting in an EOQ of 900 lamps and approximately 6 orders per year. The mean monthly demand is 450 lamps, leading to a time between orders of about 2 months.

Uploaded by

esmail mitwaly
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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 A particular lamp is bought at 10 cents.

Ordering cost is
150 cents and holding cost is 20% of unit price per unit
and year. The factory works 12 months per year, steady
production and management requires an 80% service
level for this particular item. Delivery lead time from the
supplier is 1,5 months. The monthly demand over the last
24 months is as follows:
500, 500, 425, 425, 450, 425, 425, 475, 475, 425, 425,
425, 475, 525, 425, 425, 450, 475, 425, 425, 475, 450,
425, 425.
 Compute the following: Economic order quantity , Reorder
point
 SOLUTION
 Total demand: 10800 (sum of 24months)
 Mean year demand: D = (10800)/2 = 5400 lamps
per year
 Mean monthly demand: d = 5400/12 = 450
lamps/month
 Economic Order Quantity:
 EOQ = 900 lamps
 Number of orders = D/EOQ = 5400/900 ≈ 6
orders per year
 Time between orders = EOQ / D = 0,167 year or
approximately ≈ 2 months

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