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Because of its high costs and national shortage in supply, Dana Farber Institute closely monitors the quantity of Corticosteroids, a lymphoma fighting drug, in this stockroom. Continuous review system has been used. Develop an inventory management plan based on the following data: Item unit cost: $2500 Standard deviation of weekly demand quantity: 25 Ordering Cost: $250 per order Lead time: 2 weeks on average Holding cost: 5% of the unit cost per year Standard deviation of lead time length: 0.2 Annual Demand (in 52 weeks): 27,300 Service probability: 95%

a) How much should be ordered each time?

b) How much is the safety stock quantity?

c) What is the reorder point (i.e. the inventory quantity that triggers new orders)?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92440791

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