Table 1

Problem 3

Lott Manufacturing, Inc.

Order costs (F)

Total period
quantity (T)

200,000

Order quantity
(Q)

10,000

Planning
period

250

Delivery time
(days)
a) EOQ

EOQ= SQRT (2*F*T / H)

50

Holding costs
per unit (H)

2,581.99 units

b) EOQ
savings

Total costs at
10,000 units
Total costs
where Q=
2,581.99

16,000
7745.9666924

Saving with
EOQ
c) Optimal
number of
orders &
Average
inventory
balance

Optimal
number of
orders

d) Reorder
point

Daily usage
rate

8,254
77

Average
inventory
balance

1290.9944487

800 units per day

Reorder point
Problem 4

1600 units

Order costs (F)

EOQ

55
24,000

Total period
quantity (T)
SQRT H=

100,000
0.1382

Holding costs 0.0190972222

per unit (H)
Problem 6

Wyann,
Manufacturing
Inc.

DEC

JAN

COGS
Ending
inventory
a)

FEB

MAR

APR

MAY

JUNE

1,000

1,500

2,100

2,700

3,500

300

450

630

810

1,050

4,800
1,440

Average daily
COGS(quarter
ly)

51.111111111

70 92.222222222

122.22

Average daily
COGS in
inventory

12.326086957

11.57 11.385542169

11.78

2880

5,190

Purchases

1650

2280

3,740

Average daily (COGS mo.1 +COGS mo.2 +COGS mo.3 )/ 90 days

COGS(quarter
ly)
Average daily Ending inventory/ Average daily COGS
COGS in
inventory
Purchases

EI - BI + COGS

b)

Inventory is being held for a shorter time period with each succeeding month with average days COGS dropping from 12.33 days in March to 11.39 days in May.

c) Balance
Fraction
Matrix

Month of
purchase

Balance Amount Matrix

Purchases

February

1,650

March

2,280

April

2,880

May

3,740

June

5,190

FEB

MAR

330

APR

MAY

JUNE

174
456

234
576

302
748

402
1038

NA

630

810

1050

1440

Balance Fraction Matric

20%

11%
20%

10%
20%

10%
20%

11%
20%

There is a generally a constant balance of inventory after each succeeding month of purchase. This differs from the result using days COGS held in inventory.