ASSIGNMENT NO: 3

COURSE:
OPERATIONS AND SUPPLY CHAIN MANAGEMENT

SECTION:
D

TOPIC:
EOQ & ROP NUMERICAL

SUBMITTED BY:
SANA REHMAT ALI
L1F13MBAM2241
AQIFA WARIS
L1F13MBAM2247

SUBMITTED TO:
PROF. ALI USMAN





PROBLEM: 1
One of the products stocked by Sams Club is SamsCola.
During the slow season, the demand rate is approximately 650 cases a month, which is
the same as a yearly demand rate of 65012 = 7,800 cases
During the busy season, the demand rate is approximately 1,300 cases a month, or
15,600 cases a year
The cost to place an order is $5, and the yearly holding cost for a case of SamsCola is
$12
According to EOQ formula:
(a) How many cases of Sams Cola should be ordered at a time during the slow season?
Total demand for the year D = 7,800 Cases
Cost to place a single order S = $5
Cost to hold one unit of inventory for a year H = $12
EOQ =
Q = ()()
Q = 2
Q = 80.62
During the slow season SamsCola should be order 80.62 OR 81 cases
(b) How many cases of Sams Cola should be ordered during the busy season?
Total demand for the year D = 15,600 Cases ; S = $5 ; H =$12
EOQ =

Q =
Q =
Q = 114.017
During the busy season SamsCola should be order 114 cases.

H
DS
Q
2

H
DS
Q
2

12
) 5 )( 15600 ( 2
PROBLEM: 2
During the busy season, the store manager has decided that 98 percent of the time, he does not
want to run out of SamsCola before the next order arrives. Use the following data to calculate the
reorder point for Sams Cola?
Weekly demand during the busy season: 325 cases per week
Lead-time: 0.5 weeks
Standard deviation of weekly demand: 5.25
Standard deviation of lead-time: 0 (lead-time is constant)
Number of standard deviations above the mean
needed to provide a 98% service level (z): 2.05
SOLUTION:
ROP = dL + SS
ROP = dL + z
2 2
2
L d
d L
By putting values:
ROP = (325) (0.5) + (2.05) ()()

()

()

ROP = (162.5) + (2.05) (3.712)
ROP = 162.5 + 7.61
ROP = 170.5
Reorder point for SamsCola is 170.5