Qn 1

Paper Cost C 40
Holding Cost/Carry Cost H 12
Order cost per order A 60
Annual Demand D 36000
EOQ 600 900
Holding cost 3600 2400
ordering cost 3600 5400
Total Cost 7200 7800
% change in total cost 8.33333333333333

What happens to
cycle inventory if
the demand rate
Qn2 increases? D increases, EOQ increases

EOQ= √(2𝐷𝑆/𝐻) lot sizes if setup

What happens to

costs decrease? S decrease , EoQ decreases

What happens to
lot sizes if interest
rates drop? I decreases, H decreases, EOQ Increases

Q3 Demand Frequency variance

2 1 0.154568
3 5 0.31684
4 15 0.18252
5 17 0.016456
6 8 0.238144
7 3 0.295704
8 1 0.207368
1.4116
z Safety stock
99% 0.838912940489169 0.996718957128945
95% 0.828943873691518 0.984874631713832
90% 0.815939874653241 0.969424479815614
50% 0.691462461274013 0.821531901621377
 25% 0.598706325682924 0.711327619065247

A=Ordering cost Quantity discount

q4 20000 400 0.2
20000-40000 400 0.196
>40000 400 0.192
Yearly Demand 240000
 300
7200
1800
9000
25

18
16
14
12
2
10
3
3 8

3 6
3 4
3 2
4
0
4 1 2 3 4
Percentile va SS SS 4
7.51 2.73 7.54395191 2.76395191 4
7 2.22 6.73426332 1.95426332 4
6 1.22 6.30262133 1.52262133 4
5 0.22 4.78 0 4
 4 -0.78 3.97863351 -0.80136649 4
4
4
4
4
4
4
4
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
6
6
6
6
6
6
6
6
7
7
7
8

EOQ
30983.8668
31298.4319 TC 31298.431 3067.24632 3067.24632 235200 241334.493
31622.7766 TC 40000 2400 3840 230400 236640 Optimal order
40000 TC 31622.776 3035.78655 3035.78655 230400 236471.573
Cycle invento 20000.5
CI in absence of quantity d 15811.3883
 Chart Title
18
16
14
12
10
8
6
4
2
0
1 2 3 4 5 6 7 8 9

Mean 4.78
Median 5
Mode 5
SD 1.18810774
23520
Month-Year product1 Demand Commodity item bread and salt EOQ model applicable
Jan-13 100
Feb-13 100
Mar-13 100
Apr-13 100
May-13 100
Jun-13 100 product1 Min
Jul-13 100 Mean 100 0
Aug-13 100 Median 100 product1 99
Sep-13 100 Mode 100
Oct-13 100
Nov-13 100
Dec-13 100
Jan-14 101
Feb-14 100
Mar-14 100
Apr-14 100
May-14 100
Jun-14 100
Jul-14 100
Aug-14 100
Sep-14 100
Oct-14 100
Nov-14 99
Dec-14 100
Jan-15 100
Feb-15 100
Mar-15 100
Apr-15 100
May-15 100
Jun-15 100
Jul-15 100
Aug-15 100
Sep-15 100
Oct-15 100
Nov-15 100
Dec-15 100
Jan-16 100
Feb-16 100
Mar-16 100
Apr-16 100
May-16 100
Jun-16 100
Jul-16 100
Aug-16 100
Sep-16 100
Oct-16 100
Nov-16 100
Dec-16 100
 Quartile
25% 50% 75% Max
1 2 3 4
100 100 100 101

product1 Demand
101.5

101

100.5

100

99.5

99

98.5

98
Oct-12 May-13 Nov-13 Jun-14 Dec-14 Jul-15
ct1 Demand

Dec-14 Jul-15 Jan-16 Aug-16 Mar-17

Month-Year Product 2 Product 3
Jan-13 97 1000
Feb-13 84 341 product 2 product 3
Mar-13 109 220 mean 99.97917 341.6458 Quartile
Apr-13 114 349 median 99.5 301.5 Min
May-13 90 220 mode 97 220 0
Jun-13 112 316 product 2 80
Jul-13 97 220 product 3 0
Aug-13 81 10
Sep-13 81 264
Oct-13 106 319
Nov-13 95 369
Dec-13 110 353
Jan-14 92 1234
Feb-14 84 301
Mar-14 120 211
Apr-14 97 249
May-14 82 207 P
Jun-14 100 289 140
Jul-14 117 50
Aug-14 119 397 120
Sep-14 87 212 100
Oct-14 105 230
Nov-14 107 339 80
Dec-14 97 245 60
Jan-15 81 1087
Feb-15 105 389 40
Mar-15 108 393
20
Apr-15 114 224
May-15 118 249 0
O c t - 12 Ma y- 1 3 N ov- 13 J un- 1 4
Jun-15 113 351
Jul-15 99 324
Aug-15 108 304
Sep-15 106 0
Oct-15 87 254
Nov-15 106 209
Dec-15 102 330
Jan-16 91 1322
Feb-16 113 0
Mar-16 92 368
Apr-16 116 230
May-16 109 308
Jun-16 96 384
Jul-16 85 269
Aug-16 80 226
Sep-16 82 210
Oct-16 96 392
Nov-16 93 329
Dec-16 116 302
 Quartile
25% 50% 75% Max
1 2 3 4
90.75 99.5 109.25 120 Eoq can't be appliedvariability in demand Auto parts sale
223 301.5 351.5 1322 seasonal sale/january blip normal + peak variati

Product 2
1400

1200

1000

800

600

400

200

0
O c t - 12 Ma y- 1 3
N ov- 13 J un- 1 4 De c - 1 4 J ul - 1 5 J a n- 1 6 A ug - 16 Ma r- 1 7
 Q/R model
2 Q/R models

Product 3
1400

1200

1000

800

600

400

200

0
O c t - 12 Ma y- 1 3 N ov- 13 J un- 1 4 De c - 1 4 J ul - 1 5 J a n- 1 6 A ug - 16 Ma r- 1 7
A ug - 16 Ma r- 1 7
Month-Year product 4 Demand
Jan-13 136
Feb-13 143 Product4
Mar-13 50 mean 83.29167 Quartile
Apr-13 4 median 97.5 Min 25% 50%
May-13 0 mode 0 0 1 2
Jun-13 0 product 4 0 0 97.5
Jul-13 0
Aug-13 0
Sep-13 150
Oct-13 163
Nov-13 180
Dec-13 201 250
Jan-14 174
Feb-14 106
Mar-14 12 200
Apr-14 1
May-14 0
150
Jun-14 0
Jul-14 0
Aug-14 0
100
Sep-14 132
Oct-14 156
Nov-14 135 50
Dec-14 200
Jan-15 184
Feb-15 165 0
O c t - 12 Ma y- 1 3 N ov- 13 J un
Mar-15 45
Apr-15 4
May-15 0
Jun-15 0
Jul-15 0
Aug-15 0
Sep-15 124
Oct-15 132
Nov-15 142
Dec-15 157
Jan-16 199
Feb-16 139
Mar-16 144
Apr-16 89
May-16 23
Jun-16 0
Jul-16 0
Aug-16 0
Sep-16 34
Oct-16 152
Nov-16 144
Dec-16 178
 Power consumption seasonality
Quartile agriculture
75% Max winter clothings
3 4 Newsvendor model Risk of shortage is very high
150.5 201

product 4 Demand

N ov- 13 J un- 1 4 De c - 1 4 J ul - 1 5 J a n- 1 6 A ug - 16 Ma r- 1 7
Ma r- 1 7
Inexpensive Resistors

Probability Quanity variance

50% 2400 62569.53125
25% 2900 5347.265625
12.50% 3150 19626.7578125
7.50% 3400 31322.9296875
5% 3600 35806.953125
Weighted average 2753.75 154673.4375
SD 393.285440233935

Service level criteria Reduction of wait time Same day shipping

No stock outs
Order fullfilled completely
Response time
 Deepreciation
Applicable in both cases as machine is already purchased.
Annual demand 1000
item cost 0.7
cost of buying 0.4 0.3 0.7
cost of making 0.14 0.3 0.44

Cost of making is less than cost of buying