High Tech, Inc. is a virtual store that stocks a variety of calculators in their warehouse. Customer orders are placed; the order is picked and packaged, and then shipped to the customer. A fixed order quantity inventory control system (FQS) helps monitor and control these SKUs. The following information is for one of the calculators that they stock, sell, and ship. Average demand is 12.5 calculators per week; lead time = 3 weeks; Ordering cost = $20/order; Holding cost = $1.20/calculator/year; Number of weeks = 52 weeks per year; Standard deviation of weekly demand = 3.75 calculators; SKU service level = 90 percent.
Based on the service level, what is the z value you find from the Z table? (Choose the closest z value to the service level)
What is the safety stock level? (Note: fraction number is allowed)
What is the reorder point?
What is the optimal order quantity?
Based on your answers in the former questions (to avoid possible rounding issues, use the answers you provided in the last few questions), what is the total annual cost including total holding cost (both cycle inventory and safety stock inventory) and total ordering cost?