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 315 days per year. One of your most important items experiences demand of 52 units per day, normally distributed with a standard deviation of 4 units per day. You experience a lead time on orders from your supplier of 6 days with a standard deviation of 4 days. If you order 1,000 units or less, you pay the supplier $12 per unit. Orders of 1,000 or more can be bought at a unit price of $11.75. Your ordering cost is $20. Your inventory carrying cost is 24 percent. You have established a service level policy of 97.5 percent on this item.
(1) What is your optimal order quantity?
Optimal order quantity units
(2) What is your reorder point?(Round your answer to the nearest whole number.)
Reorder point units
(3) How much safety stock do you carry?(Round your answer to the nearest whole number.)
Safety stock units
(4) What is your average inventory? (Round your answer to the nearest whole number.)
Average inventory units
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