An animal health care distributor has a Distribution Center (DC) in the Chicago, IL. The company would like to store penicillin that is used for companion animals at this facility. Given data below calculate the inventory management parameters as well as information required for reporting. Based on the past data it is estimated that demand for the penicillin follows normal distribution with mean equal to 1800 doses per month and standard deviation for demand is 300 doses per month. It is assumed that inventory holding rate will be 26% per unit per year and cost of each dose of penicillin is $40. In addition, the company pays $150 whenever they place an order; the lead time is 6 weeks. The objective customer service level is 99%.
Calculate the economic order quantity, EOQ at the DC
Calculate the safety stock, ss
Calculate the reorder point, ROP.....C
Calculate the average inventory level (AIL)....
Calculate the total cost expected cost of penicillin for the company