Here the text of the Test.

  SOLUTION OF TEST  MAY 29th, 2014

In the following the solution of the test is provided. The subject concern the Economic Order Quantity, The Economic Production Quantity, The total Replenishment costs, the safety stocks, the Cycle Service Level of Inventories, P1, The Time Between Stock Out Occasions, the Inventory Aggregation.

Please refer to Silver, Pyke, Peterson, Inventory Management and Production Planning and Scheduling, 1998 for any further information.

The following figure show a 2 echelon supply chain with 3 retailers and one factory. Data for the excercise are shown just after the figure 1.

Figure 1


  Holding costs factor, r_  =0.1 €/€-year

  Item value at retailer, vr=12 €/item

 Setup cost Retailer 1, A1=100 €/order

Monthly demand Retailer, 1 D1=100 items/month

 Setup cost Retailer 2, A2=125 €/order

 Monthly demand Retailer 2, D2=250 items/month

Setup cost Retailer 3, A3=75€/order

Monthly demand Retailer 3, D3=70items/month