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Management Studies

An animal health care distributor has five warehouses in the USA. The company would like to perform a study to evaluate the effects of inventory consolidation on customer service level. The study will consider penicillin that is used for companion animals. Based on the past data it is estimated that demand for the penicillin at each warehouse follows normal distribution with mean equal to 2500 doses per week and standard deviation for demand is 200 doses per week. It is assumed that inventory holding rate will be 26% per unit per year and cost of each dose of penicillin is $50. In addition, the company pays $500 whenever a warehouse places an order; the lead time is 6 weeks. The objective customer service level is 98%. Considering the situation after consolidation

Calculate the economic order quantity at the consolidated warehouse.

Q=________________

Calulate safety stock, ss.

Ss=_________________

Calculate the reorder point, ROP.

ROP=________________

Calculate average inventory level, AIL

Calculate the total cost of the consolidated warehouse

TC=_________________

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92599782

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