Inventory Management Spring 2017
(P.2, p. 205). Mountain Mouse makes freeze-dried meals for hikers. One of Mountain Mouse's biggest customers
is a sporting goods store. Every 5 days, Mountain Mouse checks the inventory level at the superstore and places an
order to restock the meals. These meals are delivered by UPS in 2 days. Average demand during the reorder period
and order lead time is 100 meals, and the standard deviation of the demand during this same time period is about 20
Calculate the restocking level for Mountain Mouse. Assume that the superstore wants a 90% service level. What
happens to the restocking level if the superstore wants a higher level of service- say 95%?
Suppose there are 20 meals in the superstore when Mountain Mouse checks inventory levels. How many meals
should be reordered, assuming a 90% service level?
(P.3, p.205). Pam runs a mail-order business for gym equipment. Annual demand for TricoFlexers is 16,000. The
annual holding cost per unit is $2.50, and the cost to place an order is $50.
a. What is the economic order quantity?
Suppose the demand for TricoFlexers doubles, to 32,000. Does the EOQ also double? Explain what happens.
The manufacturer of TricoFlexers has agreed to offer Pam a price discount of $5 per unit ($45 rather than $50) if
she buys 1,500. Assuming that the annual demand is still 16,000, how many units should Pam order at a time?