76 CHAPTER 6 INVENTORY CONTROL MODELS

6-31. D  8,000; d  40; p  150; Cs  $100; Ch  $0.30 six alternatives. Alternative 1 is to have a reorder point of 40, al-
ternative 2 is a reorder point of 50, alternative 3 is a reorder point
Q*p 
0.3(1
2(8,000)(100)
 40/150)
 2,697 scissors
of 60, and so on. The additional carrying cost is equal to $5  the
number of additional inventory items. There are six states of na-
6-32. D  10,000; d  50; p  500; Co  $40; Ch  $0.60 ture or events for this problem. Event or state of nature 1 is a de-
mand over lead time of 40 units. Event 2 is a demand of 50, event

0.60(1
2(10,000)(40) 3 is a demand of 60, and so on. The solution for this problem is
Q*   1,217 wheel bearings presented below. As you can see, the best decision is alternative 6,
 50/500)
which is to have the reorder point plus safety stock equal to 90. If
6-33. D  1,000; unit cost  $50; Co  $40; the normal reorder point is 60, the safety stock is 30 units.
Ch  0.25  unit cost 6-35. m  60;   7
Safety stock for 90% service level
Q
2(1,000)(40)
0.25(50)
 80
 sZ (at 0.90)  7  1.28  8.96  9
With discount, unit cost  (1  0.03)  $50  $48.50 6-36. Total Cost 
Unit Cost 
Q*d  0.25
2(1,000)(40)
 48.50
 81.22 Code
XX1
Demand
$7,008
which should be adjusted to minimum orderable quantity (i.e., B66 $5,994
200). 3CP0 $1,003.52
1,000 33CP $82,292.16
Original total cost  1,000  50   40 R2D2 $2,220
80
RMS $1,998.88
80
  0.25  50 Total cost  $100,516.56
2
70% of total cost  $70,347.92
 $51,000
1,000 The item that needs strict control is 33CP. Items that should not be
Discount cost  1,000  48.50   40 strictly controlled are XX1, B66, 3CP0, R2D2, and RMS.
200
200 6-37. Co  $60; Ch  $10; stockout cost  $50/unit; ROP 
  0.25  48  $49,912.50 650; number of orders  5
2
For this problem, the expected stockout cost is $50 per stock-
Therefore, North Manufacturing should take the discount.
out  5 times per year  the number of units short. There are 11 al-
6-34. Cc  $40; Ch  $5; ROP  60 units  safety stock. ternatives. Alternative 1 is to have a reorder point plus safety stock
The expected stockout cost is $50 per stockout  7 orders per of 600, alternative 2 is a reorder point of 650, alternative 3 is a re-
year  the number of units short. For this problem, there will be order point of 700, and so on. The additional carrying cost is equal

Solution for Problem 6-34

DEMAND
Event 1 Event 2 Event 3 Event 4 Event 5 Event 6
Probability 0.10 0.20 0.20 0.20 0.20 0.10
Alternative 1 $ 0 $3,500 $7,000 $10,500 $14,000 $17,500
Alternative 2 50 0 3,500 7,000 10,500 14,000
Alternative 3 100 50 0 3,500 7,000 10,500
Alternative 4 150 100 50 0 3,500 7,000
Alternative 5 200 150 100 50 0 3,500
Alternative 6 250 200 150 100 50 0

EXPECTED COST TABLE

Alternative Expected Cost
1 $8,750
2 5,605
3 3,170
4 1,445
5 430
6 125 k The best alternative