Question

Mozer’s Garden Solutions has a chain of retail stores in the mid-west. Mozer’s orders hedge trimmers from a wholesaler. Every year Mozer’s requires 9,000 hedge trimmers. The trimmers cost $250 per trimmer from their wholesaler. The estimated cost of ordering at the wholesaler and paying shipping fees is $200 per order: K = $200 The holding cost per hedge trimmer is estimated to be 10% of the cost of the trimmer h = 0.1 × $250 = $25 The EOQ for the hedge trimmers is 379 trimmers.

3a. Describe an appropriate ordering policy if the lead time (LT) for the hedge trimmers is constant at 3 months. Specify the amount that should be ordered at the ROL.

3b. If Mozer's guarantees a 95% in-stock rate, what should their Safety Stock of hedge trimmers be? What is the total ROL = demand during lead time + Safety Stock?

Answer 1