Question: Freeport Corporation finds that demand for surfboards has average demand of 34 units per day, wit…

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Jun 13, 2022

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Question: Freeport Corporation finds that demand for surfboards has average demand of 34 units per day, wit…

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Freeport Corporation finds that demand for surfboards has average demand of 34 units per day, with a standard deviation of 4 units. Lead time from the supplier averages 13 days, with a standard deviation of 3 days The item costs $74 and the inventory carrying cost is 30 percent. Use Table 7-2 a. Suppose management decides to offer a 95 percent service level; that is, it is willing to experience a stockout probability of 5 percent during the order cycle. How much safety stock should be carried? (Do not round intermediate calculations. Round up your answer to the next whole number.) stock b. How much is the annual inventory carrying cost of the safety stock because of this decision? (Round your answer to the nearest dollar amount.) Annual inventory ca cost c. You decide ha you want hs company o g ve better service o its customers. You decide at a 9 percen ser round intermediate calculations. Round up your answer to the next whole number.) e level s a pro ate. How much sare / s oc mu became o er is serv ce e e not stock units d. What is the additional inventory carrying cost that will be incurred on this item because of your decision to increase the service level? (Round your answer to 2 decimal places.) cost

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Freeport Corporation finds that demand for surfboards has average demand of 34 units per day, with a standard deviation of 4 units. Lead time from the supplier averages 13 days, with a standard deviation of 3 days The item costs $74 and the inventory carrying cost is 30 percent. Use Table 7-2 a. Suppose management decides to offer a 95 percent service level; that is, it is willing to experience a stockout probability of 5 percent during the order cycle. How much safety stock should be carried? (Do not round intermediate calculations. Round up your answer to the next whole number.) stock b. How much is the annual inventory carrying cost of the safety stock because of this decision? (Round your answer to the nearest dollar amount.) Annual inventory ca cost c. You decide ha you want hs company o g ve better service o its customers. You decide at a 9 percen ser round intermediate calculations. Round up your answer to the next whole number.) e level s a pro ate. How much sare / s oc mu became o er is serv ce e e not stock units d. What is the additional inventory carrying cost that will be incurred on this item because of your decision to increase the service level? (Round your answer to 2 decimal places.) cost

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