A sporting goods company has a distribution center that maintains inventory of fishing rods. The fishing rods have the following demand, lead time, and cost characteristics:
Average demand = 220 units per day, with a standard deviation of 21 units
Average lead time = 21 days with a standard deviation of 2 days
250 days per year
Unit cost = $24
Desired service level = 95%
Ordering cost = $64
Inventory carrying cost = 25%
a. What is the standard deviation of demand during lead time?
b. How much safety stock should be carried?
c. Calculate EOQ.
d. Calculate annual ordering cost.
e. Calculate annual inventory carrying cost.
f. Calculate annual product cost.
g. Calculate total cost.
h. Calculate average cycle stock.
i. Calculate average inventory.