Exe 1: The MA company’s supplier decides to offer price concessions in order to attract
larger orders. The price structure is shown below.
Order size Price/unit (USD)
1 - 399 2.2
400 - 699 2.0
700 or more units 1.8
The ordering cost is $5.5 per order; annual demand is 10,000 units. The holding cost is
20% of purchase price. The company operates in 250 days per year. Determine the optimal
order quantity and the optimal cost?
Exe2: Annual demand for product A of the company is 3600 units. An average ordering
cost is $100/order and an average holding cost of $2/unit/year. The product price is
$50/unit. The company operates 300 days per year, and the lead time from placing an order
to receiving the goods is 10 days. Do the following tasks: a. Optimal order quantity?
b. Optimal number of orders per year?
c. Optimal number of days in between any two orders?
d. What is the total inventory cost including holding cost and ordering cost?
e. Reorder point?
Exe 3: The demand for electric drills at a business store is 1,000 units per year. The ordering
cost is $100 per order, and the holding cost is 40% of the purchase price. If fewer than 120
units are ordered, the price of each electric drill is $78; if 120 units or more are ordered,
the price drops to $50 per unit.
Should the store apply a quantity discount model?
Exe4: The annual demand for hair dryers at Minh Hai store is 8,000 units, the holding
cost is $5/unit/year, the ordering cost is $32/order, and the lead time is 5 days (the
number of working days in a year is 250 days).
a. Determine the optimal order quantity.
b. Determine optimal number of orders per year?
c. Determine the reorder point.
d. Determine the total annual inventory cost (holding cost + Ordering cost).
Exe5: The electronics store has a continuous demand for laser printers throughout the
year, with a forecasted annual demand of 2,500 units. The holding cost is $20/unit/year.
The ordering cost is $60/order. The supplies provide printers many times, with an
average quantity of 50 units per delivery. The number of working days in a year is 250
days, and the lead time is 5 days.
a. Calculate the optimal order quantity and the total inventory cost for this store.
b. Determine the reorder point.
Exe6: An average monthly demand for material A is 500 units, with the price is
$100/unit. The average ordering cost per order is $25, and the inventory holding cost is
10% of the purchase price. The company has agreed with the supplier that each order will
be delivered multiple times, with 200 units supplied per week. The company operates 50
weeks per year, with a 5-day workweek.
a. Determine the optimal order quantity.
b. If the supplier offers a discount of $2/unit for orders of 1,000 units or more, what
should the company's purchasing and inventory policy for material A be?
