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CHAPTER 12
INVENTORY CONTROL MODELS
Internet Case Study: Drake Radio
1. In order to figure out the reorder points for the two suppliers, daily demand for the FM tuner must be
derived. Since one FM tuner is required for each DR-2000 (stereo system), demand for tuners is equal to
1 × (demand for DR-2000). Demand for DR-2000’s appears to be fairly constant and stable, based on the
figures from Figure 1. An average monthly demand can be calculated as follows: (Demand for Jan. +
2. To make a sound recommendation, we must determine total inventory costs for both Collins and
Nitobitso. Both companies have quantity discounts. Annual demand is estimated to be 9,600 units (800
3. Everything else being equal, Collins would be the best supplier of FM tuners in the event of fluctuating
demand. Collins’ lead time is substantially less than that of Nitobitso. Should high demand occur during
