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Given a product that costs $70.08 per unit and has an average lead time of 12 days, standard deviation of lead time of 6 days, average demand of 144.4 units/day, standard deviation of demand of 11.6 units/day, stockout cost of $23.50 per unit, ordering cost of $270/order, inventory holding cost of 20% of item cost and needs to be in-stock 90% during lead time, calculate the following (you can leave all of these as decimals):

Assume the company is using a Continuous (EOQ) model to manage this inventory for parts a-d.

What is the economic order quantity?

What is the expected number of units out of stock during an order cycle?

What is the average inventory level?

What is the annual service level?

Assume the company is using a Periodic model to manage this inventory for parts e-f

What is the reorder period, in days? Answer must be shown in days.

Assume lead time is constant at 12 days. What is s', the standard deviation of demand during lead time plus the reorder period?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93112262

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