Question

You manage inventory for your company and use a continuous review inventory system to control reordering...

You manage inventory for your company and use a continuous review inventory system to control reordering items for stock. Your company is open for business 300 days per year. One of your most important items experiences demand of 20 units per day, normally distributed with a standard deviation of 3 units per day. You experience a lead time on orders from your supplier of six days with a standard deviation of two days. The unit price, regardless of order size, is $4.75. Your ordering cost is $10. Your inventory carrying cost is 20 percent. You have established a service level policy of 97.5 percent on this item.

a. What is your optimal order quantity?

b. What is your reorder point?

c. How much safety stock do you carry?

d. What is your average inventory?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

If you are satisfied with a answer plz upvote thank you

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Wong Enterprises used a Continuous Review System (i.e., Q System) for controlling inventory for a specific...
Wong Enterprises used a Continuous Review System (i.e., Q System) for controlling inventory for a specific end-item. The firm operates 5 days per week and 52 weeks a year and the end-item has the following characteristics:             Demand (D) = 20,020 units/year             Ordering Costs (S) = $40/order             Holding Costs = $1/unit/six months             Leadtime (L) = 10 days             Cycle Service Level = 94.95%             Assume that Demand is normally distributed; with Standard Deviation of weekly demand =...
Your cookie supplier delivers roughly five days after you place your order. Daily demand follows a...
Your cookie supplier delivers roughly five days after you place your order. Daily demand follows a normal distribution with mean 100 and standard deviation 15. E[d] = E(D daily) = 100 bags, σD daily = 15 bags E(LT) = 5 days, σLT = 1 day What reorder point should you use if you want a 97.5% in-stock rate?
Jake, Inc. begins a review of ordering policies for its continuous review system by checking the...
Jake, Inc. begins a review of ordering policies for its continuous review system by checking the current policies for a sample of its A items. Following are the characteristics of one item: Demand (D) = 94 units/week (assume 52 weeks per year) Ordering and setup cost (S) = $720/order Holding cost (H) = $23/unit/year Lead time (L) = 3 weeks Standard deviation of weekly demand = 30 units Cycle-service level = 82 percent Develop the best policies for a periodic-review...
Wong Enterprises used a Continuous Review System (i.e., Q System) for controlling inventory for a specific...
Wong Enterprises used a Continuous Review System (i.e., Q System) for controlling inventory for a specific end-item. The firm operates 5 days per week and 52 weeks a year and the end-item has the following characteristics:             Demand (D) = 20,020 units/year             Ordering Costs (S) = $40/order             Holding Costs = $1/unit/six months             Leadtime (L) = 10 days             Cycle Service Level = 94.95%             Assume that Demand is normally distributed; with Standard Deviation of weekly demand =...
The manager of a company is facing an inventory problem with regard to an item whose...
The manager of a company is facing an inventory problem with regard to an item whose demand is known to be evenly distributed with an annual value of 8,000 units. The cost of placing an order is Rs 50 while the annual carrying cost of one unit in inventory is Rs 5. Further it is known that the lead time is uniform and equals 8 working days and that the total working days in a year is 320 days. Using...
15. A store has an ordering cost of $250, a carrying cost of $4 per unit,...
15. A store has an ordering cost of $250, a carrying cost of $4 per unit, annual product demand of 6,000 units, and it purchases product from a supplier for $500 per unit, however, the supplier has offered the store a discount price of $400 if it will purchase 1,200 units; the store’s minimum total inventory cost is a. $2,407,300 b. $3,607,200 c. $3,464,000 d. $2,987,400 16. If a store has annual demand (365 days per year) of 6,000 units...
A local discount store stocks toy race cars. Recently, the store has received the following discount...
A local discount store stocks toy race cars. Recently, the store has received the following discount schedule for these cars.  The annual demand for race case is 5000 cars, the ordering costs are $49 per order and the annual carrying costs are 20% percent of the unit price. a.) Indicate the order quantity, price and total cost that will minimize total inventory costs. Quantity                Price 1-699                       $5.00 700-1999 $4.80 2000 +                     $4.75 b.) Assume that the discount store would like to have a...
Hershey Company uses quantitative models for inventory control. For canned syrup, the annual demand is 8,000...
Hershey Company uses quantitative models for inventory control. For canned syrup, the annual demand is 8,000 cases. The supplier is 500 miles away, and it usually takes three days to get an order filled. The average order costs $16 to process and the carrying cost per case is $40 per year. The store is open 300 days a year. A. Determine the economic order quantity. B. Determine the reorder point if a safety stock of 24 cases is desired.
Statewide Auto Parts uses a four-week periodic review system to reorder parts for its inventory stock....
Statewide Auto Parts uses a four-week periodic review system to reorder parts for its inventory stock. A one-week lead time is required to fill the order. Demand for one particular part during the five-week replenishment period is normally distributed with a mean of 20 units and a standard deviation of 8 units. Do not round intermediate calculations. At a particular periodic review, 7 units are in inventory. The parts manager places an order for 20 units. What is the probability...
Alexis Company uses 800 units of a product per year on a continuous basis. The product...
Alexis Company uses 800 units of a product per year on a continuous basis. The product has a fixed cost of $50 per order, and its carrying cost is $2 per unit per year. It takes 5 days to receive a shipment after an order is placed. And the firm wishes to hold 10 days usage in inventory as a safety stock Calculate the EOQ Determine the average level of inventory. (Note: Use a 365 day year to calculate daily...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT