The best-selling item for the past several years in a natural history museum gift shop is a bird feeder. Sales are 4 feeders per day with a standard deviation of weekly demand of 5 units. Each feeder cost the museum $60 and is sold for $75. The museum is open 5 days per week, 52 weeks per year. The cost to place each order is $45, and annual holding cost is 25% of the purchase cost. Lead time from the supplier is 10 business days, and the museum wants to achieve a 90% service level. The museum maintains a perpetual inventory system, and at the end of the year any excess bird feeders are discounted to sell for $50.
a. How many bird feeders will the museum need to order each time total annual cost?
b. When should the museum place the orders for the bird feeders?
c. How much safety stock does this inventory plan specify?
d. How long should each order last?
e. What is the total ann cost of this inventory system?