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Management Studies

Problem:

Yearly demand of high performance tires at a retail store is 10,000 per year. The ordering cost is $400, the carrying cost is $100, and the lead time is 9 days. The retail store only closes 5 days in the year.

Required:

Question 1) Find the optimal order size

Question 2) Find the total annually inventory cost.

Question 3) What is the reorder point?

The current price of each tire is $150. The supplier offered a discount of $10 per tire if the retailstore orders more than 300.

Question 4) What is the right decision? (justify your answer)

The company wants to ensure a 95% (z=1.645) service level.

Question 5) What would be the cost of the safety inventory? Solve the given numerical problem and illustrate step by step calculation.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91169038

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