2
Jill's Job Shop buys two parts (Tegdiws and Widgets) for use in its production system from two different suppliers. The parts are
needed throughout the entire 52-week year. Tegdiws are used at a relatively constant rate and are ordered whenever the remaining
quantity drops to the reorder level. Widgets are ordered from a supplier who stops by every four weeks. Data for both products are as
follows:
10
points
ITEM
TEGDIW
WIDGET
Annual demand
11,000
8,000
Holding cost (% of item cost)
10%
20%
Setup or order cost
$ 110.00
$ 10.00
Lead time
4 weeks
4 weeks
Safety stock
65 units
7 units
Item cost
$ 15
$ 8
a. What is the inventory control system for Tegdiws?
Note: Round your answers to the nearest whole number.
Answer is complete but not entirely correct.
Optimal reorder quantity
110 units
Reorder point
911 units
b. What is the inventory control system for Widgets?
Note: Round your answer to the nearest whole number.
Answer is complete and correct.
Inventory control system for Widgets q = 1,238 - I (Inventory on hand)