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REQUIRED:
COMPLETE EACH QUESTION ON A SPREADSHEET.
USE ONE WORKBOOK WITH A DIFFERENT TAB FOR EACH QUESTION. SHOW ALL CALCULATIONS.

QUESTION
1

Redan
Manufacturing uses 1,700
switch assemblies per week and then reorders
another 1,700. If the relevant carrying
cost per switch
assembly is $7 and the fixed order
cost is $725, is Redan’s
inventory policy optimal?
Why or why not?

QUESTION
2

The Trektronics store
begins each week with 750 phasers in stock. This stock is depleted
each week and reordered. If the carrying cost per phaser is $65 per year and
the fixed order cost is $395, what is the total carrying cost? What is the
restocking cost? Should Trektronics increase or decrease its order size? Describe an optimal inventory
policy for Trektronics in
terms of order size and order frequency.

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