a. Our home construction company buys nails in 15-pound boxes. We use an average of 1180 boxes a year. The vendor that makes the nails can produce 44 boxes per day while our usage is 19 boxes per day. It costs $3.00 to place the typical order. Annual carrying costs are $0.85 per box.
What will be our average number of boxes on hand if we order the EOQ bags in each order? (Keep up to two decimal places in your answer)
b. Our home construction company still buys nails in 15-pound boxes but now we use an average of 3140 boxes a year. Preparing an order and receiving a shipment of nails involves a cost of $1.45 per order. Annual carrying costs are $0.9 per bag.
What will be their total cost of ordering and carrying the nails? (Include the pennies in your answer)
c. Management wants to change the safety stock of dehydrated water to be 1.25 pounds. This item has a standard deviation during the lead time of 1.5 pounds with an average of 64.3 pounds maintained in inventory.
Calculate the percentage of time that you expect to run out of dehydrated water. (Keep two decimal places in your answer that represents percentage)