High Tech Inc. is a virtual store that stocks a variety of calculators in their

Question

High Tech Inc. is a virtual store that stocks a variety of calculators in their warehouse. Customer orders are placed, the order is picked an dpackaged, and then shipped to the customer. A fixed order quantity inventory control system (FQS) helps monitor and control these SKUs. The following information is for one of the calculators that they stock, sell and ship.

Average demand- 12.5 calculators per week

Lead time- 3 weeks

Order cost- $20/order

Holding cost- 1.20/calculator/year

Number of weeks- 52 weeks per year

Standard deviation of weekly demand- 3.75 calculators

SKU service level- 90%

Curront on-hand inventory-- 35 calculators

Scheduled receipts- 20 calculators

Backorders- 2 calculators

A. What is the Economic Order Quantity?

B. What is the total annual order and inventory holding costs for the EOQ?

C. What is the reorder point without safety stock?

D. What is the reorder point with safety stock?

E. Based on the previous info, should a fixed order quantity be placed, and if so, for how many calculators?

Explanation / Answer

EOQ = 147 calculators Please consider the time devoted to make this reply by rating this as 5 star. Thank u in advance. God bless u :)

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