Question

WeCare is a store specialized in wearable devices that monitor health parameters. Their best seller is the iHeart, a bracelet that continuously takes blood pressure measurements and changes color when the pressure is above a certain limit.

WeCare buys iHeart at a price of $20 per unit, and sells it at $50 per unit. Each time WeCare places an order for this product, the administrative cost adds up to $400 per order. The holding rate for carrying inventory of iHeart is estimated to be 20% per year. The demand for iHeart in WeCare stores is pretty stable around 3287 units per year. (We would assume instantaneous replenishment for this problem.) Assume 52 weeks in a year.

WeCare current policy is to order 500 units every time they run out of stock. Calculate the inventory costs associated to this policy.

WeCare has hired you to help them manage their inventory. Can you propose a better inventory policy?

Order quantity (Q*):

Round your answer to the nearest integer.

Time between replenishments (T*) in weeks:

Write your answer as a decimal number with two decimal places.

What would be the inventory costs under this policy?

Ordering cost:

Round your answer to the nearest integer.

Holding cost:

Round your answer to the nearest integer.

Answer 1

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