# solution

Q8. EOQ model

ABC Company is considering to restock its inventory for product X. So far, we have known the following information:

• Expected Annual Demand: 28,000 units
• Unit Value: \$69.65
• Order cost: \$17.00 per order
• Annual carrying cost factor: 25%

Determine the optimal economic ordering quantity, ordering time interval, and total cost. (Show steps)

Q9. Contionous review policy for inventory management

We know the following information of a distributor of TV sets that orders from a manufacturer and sells to retailers

• Weekly demand is a normal distribution
• Average weekly demand = 50
• Standard deviation of weekly demand = 10
• Fixed ordering cost = \$3,500
• Value of a TV = \$350
• Annual inventory holding cost per unit = 21% of its value
• Replenishment lead time = 2 weeks
• Expected service level = 97%

Determine the safety stock level and re-order level at an expected service level of 97%, as well as the order quantity.

Q10. Weighted Center of Gravity

A food company needs to build a warehouse facility at the center of gravity weighted by the demand volume (measured by tons) given the following information of five marketplaces. Find this facilityâ€™s location, represented by the horizontal coordinate and vertical coordinate.

 Marketplaces Demand (tons) Horizontal coordinates Vertical coordinates A 100 1 11 B 300 7 11 C 200 5 9 D 500 7 7 E 1000 1 1

Q11. Network design

Lonestar company produced a new product and planned to pass its two plants to deliver to the retail stores in Dallas, Austin and Houston. All the products will be shipped through the two warehouses. There are two plants. The plant 1 has the annual capacity of 50,000. Plant 2 has sufficiently large capacity. The demands from each city are 40,000, 80,000, and 45,000 respectively. Please find the optimal network for Lonestar company. (Use excel solver and copy the result here)

The unit distribution cost shows as table below.

 Facility Warehouse P1 P2 Dallas Austin Houston W1 2 1.5 5 4 3 W2 4 2 2 2 2

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