Question

The Sun City police maintenance department uses about 200 patrol car tires per month. Each tire costs $80 and the holding cost rate is 35%. The ordering costs are estimated at $185 per order. The supplier takes a week to deliver the tires (1/4 month). They currently order 600 tires per order. 1. What is the reorder point based on the supplier’s lead time? 2. What is the cost of their current inventory policy? 3. What is the optimal ordering policy based on EOQ? 4. What is the cost of the EOQ based policy?

          The Sun City police maintenance department uses about 200 patrol car tires per month. Each tire costs $80
and the holding cost rate is 35%. The ordering costs are estimated at $185 per order. The supplier takes a
week to deliver the tires (1/4 month). They currently order 600 tires per order.
1. What is the reorder point based on the supplier’s lead time?
2. What is the cost of their current inventory policy?
3. What is the optimal ordering policy based on EOQ?
4. What is the cost of the EOQ based policy?

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Added by Ivan R.

Thermodynamics: An Engineering Approach

Yunus A. Çengel, Michael A. Boles 8th Edition

Chapter 3

Instant Answer

Solved by Expert Vidhi Bhatt

11/23/2020

Step 1

Step 2: Calculate the Total Cost of the Current Inventory Policy The total cost of an inventory system is composed of the ordering cost, holding cost, and purchase cost. The formula for total cost is: \[ \text{Total Cost} = \text{Ordering Cost} + \text{Holding Show more…

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The Sun City police maintenance department uses about 200 patrol car tires per month. Each tire costs $80 and the holding cost rate is 35%. The ordering costs are estimated at $185 per order. The supplier takes a week to deliver the tires (1/4 month). They currently order 600 tires per order. 1. What is the reorder point based on the supplier’s lead time? 2. What is the cost of their current inventory policy? 3. What is the optimal ordering policy based on EOQ? 4. What is the cost of the EOQ based policy?

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