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Unformatted text preview: 2. An automotive repair shop stocks many sizes of tires. One particular size and model is purchased for $30. The manager estimates the fixed cost to order at $75, including the delivery charge and the paperwork. Using the cost of rent, interest, and utilities, the manager estimates the cost of carrying inventory at approximately 10% per year based on average inventory value. The shop sells approximately 3,000 of these tires per year. Orders are received 2 weeks after placement. a. Determine the optimal number of tires the shop should purchase each time an order is placed, and the time between orders. b. What is the reorder point? Average inventory carried? c. If the weekly demand standard deviation were 5, what would the reorder point be to achieve a 98% service level? Average inventory carried?...
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This note was uploaded on 09/29/2011 for the course MGT 3501 taught by Professor Chang during the Fall '10 term at Georgia Tech.
- Fall '10