a. What is the Economic Order Quantity? b. What are the total annual order and inventory-holding costs for the EOQ? c. What should the reorder point be to have a 95% service level?
Unaiki manages the inventory for Hine's kids collection. She's had too many stockouts lately and is worried about poor customer service. Therefore, she is considering a change to the current inventory
average demand: 250 pairs/week
lead time: 2 weeks
order cost = $75 per/order
unit cost: $21.50
carrying charge rate = 18%
desired service level = 95%
standard deviation of weekly demand: 40
number of weeks per year: 52
Unaiki decides to use a fixed order quantity system.
a. What is the Economic Order Quantity?
b. What are the total annual order and inventory-holding costs for the EOQ?
c. What should the reorder point be to have a 95% service level?
d. Help Unaoiki understand her new order logic: In order to stay in stock 95% of the time. she should place an order for ________ pairs when ____________.
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