A company finds that it has an average daily demand of 300 units. The company op

Question

A company finds that it has an average daily demand of 300 units. The company operates 250 days a year. The lead time from supplier averages 7 days, ranging from a low of 3 days to a high of 10 days. The cost of each unit is $300. The company's order cost is $100 per order. The inventory carrying cost is 20%. Combined standard deviation of demand during lead time is 40 units and service level is 95%. Now the company negotiates to get the same product from the same supplier at at cost of $275/unit. What will be the safety stock of the product to account for this change in cost structure. (In case of differences in rounding, choose the closest answer)

A.)63

B.)64

C.)61

D.)66

A.)63

B.)64

C.)61

D.)66

Explanation / Answer

B.)64

B.)64

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