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    Inventory Management

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    A store has collected the following information on one of its products (10 pts):

    Demand = 10,000 units/year
    Standard deviation of weekly demand = 25 units
    Ordering costs = $30/order
    Holding costs = $4/unit/year
    Cycle-service level = 95% (z for 90% = 1.28)
    Lead time = 2 weeks
    Number of weeks per year = 50 weeks

    a.If a firm uses the continuous review system to control the inventory, find the following:

    Economic Order Quantity (EOQ):

    Appropriate Safety Stock:

    Reorder Point:

    Annual Order Costs:

    Annual Holding Costs:

    Total Annual Costs (including safety stock):

    b.If the firm decided to change to the periodic review system to control the item's inventory, find the following:

    Review Interval (Time Between Orders):

    Appropriate Safety Stock:

    Target Inventory Level:

    Annual Order Costs:

    Annual Holding Costs:

    Total Annual Costs (including safety stock):

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    https://brainmass.com/business/inventory-management/inventory-management-81153

    Solution Summary

    Solution contains calculations of Economic Order Quantity (EOQ), appropriate Safety Stock, reorder Point, annual Order Costs, annual Holding Costs and total Annual Costs (including safety stock):

    $2.19

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