Schaan Healthcare Products is a distributor of medical/surgical products in Saskatchewan. Schaan has a warehouse in Saskatoon that carries thousands of items, one of which is item #345-5870, Micro-Touch Surgical Glove, size 7. The demand for this item (in cases) during die September to November 2002 was 25, 57, and 50, respectively. Schaan's inventory manager uses a three-month moving average to forecast next month's demand for the items. The three- month moving average forecast for December's demand for size 7 gloves is 44 cases. Suppose that he uses die EOQ/ROP model to replenish this item. The surgical gloves are purcliased from Ansell Limited in cases of 200 units at a cost of $ 120 per case. Using the three-month moving average forecast for December, ordering cost of $ 15 per order, inventory holding cost rate of 15 percent per year, and purchase lead time of two days,
a. Calculate the EOQ for this item (rounded to a whole number).
b. Calculate the total annual holding and ordering cost if order quantity is 30 cases.
c. Using lead time service level of 96 percent and standard deviation of monthly demand of 16.82 cases, calculate die ROP (rounded to a whole number).
d. In fact, Schaan uses the fixed order interval model for replenishing this item. Calculate the order up to level (⌡max) for this item (rounded to a whole number) if it is ordered every two weeks and the desired service level is 94 percent.