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A particular model of Inventory Management where Periodic Review is equal to the Lead Time. In particular conditions about EOQ are discussed and difference performance measurements considered: Cycle Service Level, Fill Rate.

 

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A hardware shop order screws and bolts from a local supplier every second week R. Lead Time, LT of the supplier is 2 weeks. 14 mm Bolts average demand is 150 units/week, and safety stocks are equal to 3 days of supply. Considering a 5 working days per week and 50 weeks/year:

a) What is Q=averaged quantity of Bolts ordered?

b) Indicating with A the setup costs in €/order, r the currying costs in €/€-year and v the bolt cost in €/unit, under what conditions Q=EOQ?

c) what is the maximum level of the Inventory Position during and Inventory Cycle?

d)If an order must be placed whn the inventory level is 130 units, what this the order quantity?

e) Determine the  standard deviation of demand during (LT+R)  if the Cycle Service Level P1= 90%

f) considering the above value, what is the Fill Rate P2 in the case of complete backorder?

g) and in the case of complete back order?

h)what is the reduction of safety stocks if we adopt a (s,Q) continuous review, fixed quantity Inventory Policy with the same P1?