Question: A sporting goods company has a distribution center that maintains inventory of fishing rods. The …

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Jun 13, 2022

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Question: A sporting goods company has a distribution center that maintains inventory of fishing rods. The …

by | Jun 13, 2022 | Questions & Answers



A sporting goods company has a distribution center that maintains
inventory of fishing rods. The fishing rods have the following
demand, lead time, and cost characteristics:


Average demand = 140 units per day, with a standard deviation of 13
units


Average lead time = 13 days with a standard deviation of 2 days


250 days per year


Unit cost = $30


Desired service level = 90%


Ordering cost = $54


Inventory carrying cost = 20%



a. What is the standard deviation of demand during
lead time? (Round up your
answer to the next whole number.)



b. How much safety stock should be
carried? (Round up your answer to the next
whole number.)



c. Calculate EOQ. (Round up your answer to the next
whole number.)



d. Calculate annual ordering cost. (Round your answer to 2 decimal
places.)



e. Calculate annual inventory carrying
cost. (Round your answer to the nearest
dollar amount.)



f. Calculate annual product cost. (Round your answer to the nearest
dollar amount.)



g. Calculate total cost. (Round your answer to 2 decimal
places.)



h. Calculate average cycle stock.



i. Calculate average inventory.

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