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Inventory Cost Analysis: EOQ vs Lot-for-Lot

This document discusses inventory management policies for an item with annual demand of 120 units. It provides the holding cost per item per year and ordering cost per order. It then asks the reader to determine the total inventory cost if using an Economic Order Quantity (EOQ) policy, given variable monthly demand provided in a table. It also asks the reader to calculate the inventory costs if using a Lot-for-Lot policy for the same item and costs.

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8 views2 pages

Inventory Cost Analysis: EOQ vs Lot-for-Lot

This document discusses inventory management policies for an item with annual demand of 120 units. It provides the holding cost per item per year and ordering cost per order. It then asks the reader to determine the total inventory cost if using an Economic Order Quantity (EOQ) policy, given variable monthly demand provided in a table. It also asks the reader to calculate the inventory costs if using a Lot-for-Lot policy for the same item and costs.

Uploaded by

cheche datingaling
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Problem Set 5.

1
Consider an item whose annual demand is 120 units, the holding cost is $8 per item per
annum ($0.67 per item per month), and the ordering cost is $19.2 per order. If the
demand varies by month as shown in the table below, determine the total inventory cost
if you would use the standard Economic Order Quantity (EOQ) policy to manage your
inventory. Assume instantaneous replenishment.
Problem Set 5.2
Consider the situation in problem set 5.1. If you were to use Lot-for-Lot policy, what
would your inventory costs be?

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