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Lean Inventory :Supply Chain Operations (Supply Chain Operations) Answers 2026

📊 Example Input Data (Illustrative)

Product Annual Demand (D) Ordering Cost (S) Holding Cost (H) Lead Time (days) Īƒ Demand (per day) Īƒ Lead Time (days)
A 10,000 500 20 5 8 1
B 8,000 400 25 6 6 1.2
C 12,000 600 18 4 9 0.8
D 6,000 450 30 7 5 1.5
E 15,000 700 22 3 10 0.5

Assume:

  • Working days per year = 250

  • Z-values:

    • 95% → 1.65

    • 97.5% → 1.96

🧮 Example Calculations (Using This Data)

Q1 – Product A: Total Cost (Holding + Ordering)

EOQ = √(2DS / H)
= √(2×10,000×500 / 20)
= 707

  • Ordering cost = (D / EOQ) × S = (10,000 / 707) × 500 ≈ 7,072

  • Holding cost = (EOQ / 2) × H = (707 / 2) × 20 ≈ 7,070

✅ Total Cost ≈ 14,142

Q2 – Product B: Inventory Holding Cost

EOQ = √(2×8000×400 / 25) ≈ 506

Holding cost = (506 / 2) × 25 ≈
✅ 6,325

Q5 – Product E: EOQ

EOQ = √(2×15,000×700 / 22)
✅ 977

Q6 – Product A: Combined Std Dev (Demand + Lead Time)

Formula:

Īƒ=(LĪƒd2)+(Dd2ĪƒL2)\sigma = \sqrt{(L\sigma_d^2) + (D_d^2\sigma_L^2)}

  • Daily demand = 10,000 / 250 = 40

Īƒ = √(5×8² + 40Â˛Ã—1²)
= √(320 + 1600)
= √1920 ≈ 44

✅ Answer: 44

Q7 – Product B: Safety Stock (97.5%)

Īƒ ≈ √(6×6² + 32Â˛Ã—1.2²) ≈ 43

Safety stock = 1.96 × 43 ≈
✅ 84

Kanban Bin Size (Example – Product A)

Kanban = Demand during lead time + Safety stock
= (40 × 5) + (1.65 × 44)
= 200 + 73
✅ 273