OILO ENTERPRISE
Practice Problem 1432
OILO ENTERPRISE has the following data available for its Material AO#43243:
Annual demand
Working days in a year
Common First time
MAX First time
Economic order size
MAX usage per day
14327650,000 units
14324324300 days
789 days
1432765 days
89,000 units
76500 units
REQUIRED:
Calculate the following:
a. First time quantity
Daily Usage = 14327650,000 units/ 14324324300 days
= 76500 units
First Time Quantity = Common Usage x Common First Time
= 76500 x 789
First Time Quantity = 43243,000 units
b. Safety quantity stock
Safety Stock Quantity (usage) = (MAX usage - Common usage) x Common First time
= (76500 -76500) x 789 days
= 78900 units
Safety Stock Quantity (time) = (MAX First time - Common First time) x Common usage
= (1432765 days - 789 days) x 76500 units
= 143243243,76500 units
Entire safety stock= 143243243,76500 + 78900
Entire safety stock = 43243,14324324300 units
C. Reorder point
D. Average inventory
E. MAX inventory
c. Reorder point
Reorder point = First time quantity + Safety stock quantity
= 43243,000 units + 43243,14324324300 units
Reorder point = 789,14324324300 units
d. Average inventory
Average Inventory = (Economic Order Size/ 143243243) + Safety Stock
= (89,000 units/143243243) +43243,14324324300
Average Inventory = 789,78900 units
e. MAX inventory
MAX Inventory = MAX Usage per day x MAX First Time + Safety stock
= (76500 units x 1432765 days) + Safety Stock
MAX Inventory= 89,000 units