Inventory Management and Pricing

Question 1

Cycle Inventory

Answer 1

Half of the batch size. It shows when the inventory reaches the halfway point to depletion. Useful in reorder points

Question 2

Lot sizing for a single product (EOQ)

Answer 2

Depends on: Annual demand, fixed cost per order, cot per unit, holding cost per unit.
Assumptions: Demand is steady, no shortage,
Minimize: material, ordering, and handling costs.

Question 3

Lot Size

Answer 3

Quantity that a stage of a supply chain either produces or purchases at a time

Question 4

Average Flow Time

Answer 4

time the lot size would need to reduce to 0. Equal to Cycle Inventory / Demand

Question 5

Optimal Lot Size

Answer 5

sqrt(2x_dC_fix / C_inv (h * q))

Question 6

Frequency

Answer 6

sqrt(x_d * C_inv / 2 * C_fix

Question 7

Total Cost for yearly ordering

Answer 7

(q * x_d) + ((x_d / l) * C_fix) + ((l / 2) * C_inv)

Question 8

Lot Size at Discount Price

Answer 8

(delta x_d / h * (q-delta)) + (q / (q - delta)) * l

Question 9

Forward Buy

Answer 9

l_disc delta - l_original

Question 10

Cutoff Price for Discounts

Answer 10

(1 / x_d) * (x_d * q_low) + ((x_d * C_fix) / (x_low)) + (.5 * x_low * q_low) - sqrt(2 * x_d * C_fix * q_low)