An electronics store uses a fixed order quantity inventory control system. Chara

Question

An electronics store uses a fixed order quantity inventory control system. Characteristics of one of its items is as follows: weekly demand is 2,000 units, ordering cost is $35 per order, holding cost per week is $0.04, replenishment lead-time is 3 weeks and the standard deviation of weekly demand is 400 units. Assuming the store operates 50 weeks per year, what is the EOQ for this item? Calculate the reorder point with safety stock if the store wishes to provide a 90 percent cycle-service level.

Explanation / Answer

An electronics store uses a fixed order quantity inventory control system. Characteristics of one of its items is as follows: weekly demand is 2,000 units, ordering cost is $35 per order, holding cost per week is $0.04, replenishment lead-time is 3 weeks and the standard deviation of weekly demand is 400 units. Assuming the store operates 50 weeks per year, what is the EOQ for this item? Calculate the reorder point with safety stock if the store wishes to provide a 90 percent cycle-service level.

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