Abstract
A problem set to review the concepts of continuous review inventory systems. These problems can be assigned for additional practice in calculating order quantities, inventories, and relevant costs. This can be used with the notes Managing Inventories: Determining Order Quantity (UVA-OM-1395) and Managing Inventories: The Reorder Point System (UVA-OM-1394). Excerpt UVA-OM-1489 Rev. Apr. 4, 2014 CONTINUOUS REVIEW INVENTORY SYSTEMS: PRACTICE PROBLEMS 1. Demand for an item is 1,661 units per year. The ordering cost is $ 20 per order. The carrying cost per year (c ´ k) is $ 5.40 per item. On average, how many orders are placed each year, if the economic order quantity (EOQ) is ordered? 2. An office orders stationery from a supplier. The cost of paper is $ 20.51 per ream. The ordering cost is $ 33 per order. The annual cost of carrying the inventory is 0.22 (22%) of the unit cost per ream. The annual demand is 22,013 reams of paper. What is the annual carrying cost of inventory, assuming that the EOQ is ordered? 3. Demand for an item is 9,434 units per year. The ordering cost is $ 21 per order. The carrying cost per year (c ´ k) is $ 18 per item. What is the optimal ordering quantity? . . .
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