Operations Management Case StudyScenario:An organization is reviewing its inventory control system for a fast-moving electronic component. The following data is available for analysis:
Annual Demand (D): 18,000 units
Ordering Cost (S): $100 per order
Unit Cost (C): $40 per unit
Holding Cost Rate: 20% of unit cost per year
Lead Time (L): 4 weeks
Safety Stock (SS): 600 units
Work Weeks per Year: 52
Quantity Discount:8% discount on orders of 800 units or more
Task 1: EOQ Calculation
What is the optimal order quantity using the EOQ model, assuming no quantity discount is applied?
Answer:
Task 2: Reorder Point Calculation
What is the reorder point if the lead time is 4 weeks and safety stock is 600 units?
Task 3: Flowchart of Replenishment Process
Draw a flowchart illustrating the inventory replenishment process, starting from inventory monitoring to the receipt of the order.
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