Periodic and Continuous Models.
The corner drug store you work for sells fidget spinners and daily sales for the last quarter are shown on the “Problem 3 Data” tab of the Excel file in columns A-B. Assume demand this past quarter is ¼ of the demand for the entire year. The company also tracked the lead time for the 5 orders that were placed last quarter and those are shown in columns G-J. Fidget spinners cost an average of $5 each and inventory holding cost is estimated at 35% of this item cost. The cost to place each order is $250.
Create an EOQ model for this company assuming the store would like to be in stock 90% of the time during lead time.
Determine the Economic Order Quantity.
Determine the reorder point. (Hint: express lead time and demand in “days”. Find your average daily demand and average lead time in days. Then find the standard deviation of daily demand and standard deviation of lead time.)
Create a Periodic Review model for this company assuming the store would like to be in stock 90% of the time during the (review interval + lead time) period. Assume a constant lead time of 11.0 days for this model.
Determine the reorder period, T*, in days.
Determine the restocking level, M.