Problem:
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 helps monitor and control these SKUs. The following information is for one of the calculators that they stock, sell, and ship.
Average demand 12.5 calculators per week
Lead time 3 weeks
Order cost $20/order
Unit Cost $8.00
Carrying Change rate .15
Number of weeks 52 weeks per year
Standard Deviation of weekly demand 3.75 calculators
SKU service level 90 percent
Schedule receipts 20 calculators
Backorders 2 calculators
Current on-hand inventory 35 calcutors
Required:
Question 1) What is the EOQ.
Question 2) What is the total annual order and inventory holding costs for the EOQ.
Question 3) What is the reorder point without safety stock. What is the reorder with safety stock.
Solve the given numerical problem and illustrate step by step calculation.