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The Case The goal of this case study was to gain a further understanding and application skills of supply chain management This case evaluated two inventory models Fixed-Order-Period Inventory model and Perpetual Inventory model to obtain cost-based analysis of the companys inventory policies Data We have been given the weekly demand and the lead time 3 weeks for the typical DES product There is some variation in the weekly demand but there is no particular wild variation We have also been given a number of inventory-related cost factors costunit order cost tax rate and capital investment 235 00000 Additional data is also given on service level 985 the ratio of cost savings and depreciation over an 8-year horizon We assumed that 1 order cost is fixed for any order quantity 2 fixed cost associated with holding inventory and shipping cost are insignificant and 3 weekly demand is constant Analysis Fixed-Order-Period Inventory Models We evaluate the cost trade-offs involved in Fixed-Order-Period Inventory Model for increasing length of order cycles in the range of three through eight weeks durations In these models we assumed that inventory is counted only at the time specified for review The service level defines the amount of safety stock that we should hold The Z value is 217 at 985 Normal Table Value for this service level one-tailed Here the demand is randomly distributed about a mean The quantity is a product of average weekly demand and the length of the order cycle Exhibit 1 shows the computation of the Total Cost Total Cost Ordering Cost Holding Cost Ordering cost 2580givennumber of ordersyr Holding cost order size2 Safety stockholding costunit We find that for the Fixed-Order-Period Inventory model Total Cost is minimized when the duration of the ordering cycle is seven 7 weeks Table 1 Cycle Length in weeks345678 Ordering Cost447200033540002683200223600019165711677000 Holding Cost 106287013337151602732187025521365272401733 Total Cost553487046877154285932410625540530994078733 Perpetual Inventory Model New System The use of
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