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  Solution to point b)

In both cases the cost of stock (carrying costs) for a generic component is:

  (1)

where vi depends on the type of component (processor, memory of hard drive), while σLT depends on the Demand of component (see point a) above) and Qi on both Demand and type.

Since in both cases the number of different component per each type, ndct, is the same (27 in Present Case, 9  in Future Case), we  can calculate the total Carrying Cost using this formula:

(2)

 

 

Present Case

In the following index i is used for indicating the type of component:

 

i=1 means processor;

i=2 means memory;

i=3 means hard disk.

To evaluate Qi for each type of component, the EOQ formula is used. Results are:

 

Order Quantity Value Unit

Q1

6000 items/order
Q2 8485 items/order
Q3 6708 items/order

 

By using 1 it is then possible to evaluate the carrying cost of each component type:

 

Carrying cost for each component type €/year
-Carrying costs1 7923.49
-Carrying costs2 4853
-Carrying costs3 6622

 

 By using 2 Total costs of Stocks is:

 

Number of Different component Type 27
Total cc 516472.784

 

 

Future Case

 Qi Results are (3 X Qi Present Case):

 

Order Quantity Value Unit

Q1

18000 items/order
Q2 25456 items/order
Q3 20125 items/order

 

 carrying cost of each component type (3 X carrying costsi Present Case):

 

Carrying cost for each component type €/year
-Carrying costs1 23770
-Carrying costs2 13749
-Carrying costs3 19866

 

 By using 2 Total costs of Stocks is:

 

Number of Different component Type 3
Total cc (Total cc Present Case/3) 172157.6