Blue Mountain Bike, Inc. (BMBI) makes racing bicycles. It produces 500 bicycles
ID: 384409 • Letter: B
Question
Blue Mountain Bike, Inc. (BMBI) makes racing bicycles. It produces 500 bicycles a month. The company purchases the tires for bicycles from Tire4Less, Inc. (TLI). The cost of each tire is $25. BMBI's inventory carrying cost is estimated to be 20% of the cost of tire and the ordering cost is $48 per order. The lead time is 5 days and BMBl operates 365 days a year. For all questions that follow, round your answers to two (2) decimal places. A. Calculate the EOQ for tires B. Calculate the reorder point for tires.Explanation / Answer
DC Demand cycle Monthly 500 d=2*DC Demand tires monthly @2 per cycle 1000 units Per month D=d*12 Demand annually 12000 units Annually P Purchase cost 25 $ per unit K Ordering cost 48 $ per order h=(0.2*P) Holding cost 5 $ per unit LT Lead time 5 days W Working days 365 Days LTD=LT*D/W Lead time demand 164.3836 Units R= LTD So reorder point 164.38 Ans B EOQ (Sqrt(2*k*D/h) 480.00 Ans A