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Inventory control - Assignment Example

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The order review interval is 2.49 while the target inventory levels are 494, 451 and 713 for 1B-a, 1B-b and 1B-c respectively. The inventory control policy is to place orders every 2.49 weeks and maintain inventory at levels of 494, 451 and 713.
2. The Economic Order…
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Inventory control

Download file to see previous pages... the three wines, Safety Stock cost makes up for the smallest portion of the total cost while procurement costs and Carrying cost make up for the largest portion. The procurement cost is highest for wine 2A-b and lowest for wine 2A-a. The Carrying cost is highest for wine 2A-b and lowest for wine 2A-a.The Safety stock cost is highest for wine 2A-c and lowest for wine 2A-b.The stock-out cost is highest for wine 2A-c and lowest for wine 2A-b. The Total cost is highest for wine 2A-c and lowest for wine 2A-a.
2. Ordering the mean demand is not a wise move because that may not be the most feasible quantity. It may be more or less than the EOQ and therefore lead to higher costs. For example, in the mean demand for the three wines is 256, 180 and 20 while the EOQ has different values.
Orders are placed in all the months apart from April, June and August. In the months orders are placed, the orders are of 193 bottles except in December when the order is for 256 bottles. The Total cost is $1,683.75.
2. Ordering costs are the same for all the three alternatives. Carrying costs are highest under the 2% discount alternative while they are lowest under the 1% discount alternative. The 2% alternative also has the highest total cost while the 1% has the lowest total cost.
Atkinsons, C., 2005. Advanced Economic Order Quantity. Inventory Management Review, (Online) 2 November. Available at (Accessed 7 June ...Download file to see next pagesRead More
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