62 an inventory item of xyz manufacturing has an average daily demand of 10 units wi 4302697


62) An inventory item of XYZ Manufacturing has an average daily demand of 10 units with a maximum daily demand of 12 units. The economic order quantity is 200 units. The reorder point is 50 units. Safety stocks are set at 94 units.



a.Determine the inventory level at the time of reordering.

b.Determine the purchase order lead time.

d.Determine the maximum purchase order lead time that the company can experience before it has a stockout.

63) Ralph was in the process of completing the quarterly planning for the purchasing department when a

major computer malfunction lost most of his data. For direct material XXX he was able to recover the



Average inventory level of XXX


Orders per year


Average daily demand


Working days per year


Annual ordering costs


Annual carrying costs



Ralph purchases at the EOQ quantity level.



Determine the annual demand, the cost of placing an order, the economic order quantity and the annual total costs of inventory.

64) The IBP Grocery orders most of its items in lot sizes of 10 units. Average annual demand per side of beef is 720 units per year. Ordering costs are $25 per order with an average purchasing price of $100. Annual inventory carrying costs are estimated to be 40 percent of the unit cost.



a.Determine the economic order quantity.

b.Determine the annual cost savings if the shop changes from an order size of 10 units to the economic order quantity.

c.Since the shelf life is limited the IBP Grocery must keep the inventory moving. Assuming a 360-day year, determine the optimal lot size under each of the following: (1) a 20-day shelf life and (2) a 10-day shelf life.



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