 # Identify an example of inventory in your own life. Estimate how much it costs you to hold this inventory.

## Identify an example of inventory in your own life. Estimate how much it costs you to hold this inventory.

Your Topic: Supply Chain, Logistics and Transportation

Assignment Details: Chapter 9 Pg 217 Discussion Questions 1 & 4 and Problems 1 & 2 on Page 218

#1. “Identify an example of inventory in your own life. Estimate how much it costs you to hold this inventory. Estimate the “ordering cost.” How often do you replenish this inventory, and which of the inventory policies does this most closely resemble?”
#4. “Provide an example of ABC classification in a business you are familiar with. What would be the A inventory items versus B and C? What ordering policies would you use for each of these?”
Problem
#1 “Ricky Orange’s annual demand is 12,500 units. The ordering cost is \$100 per order. Holding cost is estimated at 20% of the product cost, which is \$50 per unit. What is the number of orders per year using EOQ to compute the best quantity to order? What is the annual holding cost? What is the reorder point? Assume four weeks/month, lead time L is one week, and demand rate is 250 units per week”
#2. “You are inventory manager of Diego Supplies Inc. You computed the EOQ to be 500 units. The annual demand for the company is 5,000 units, and the holding cost is \$4 per unit. What does the ordering cost?”

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