Inventory analysis with expected Stockout cost During May and June when the local high schools and colleges hold a lot of parties, Fleener's experiences a demand for evening gowns of 1,200 units per month. Its gowns' average price is $120 each and the average cost is $50. Inventory carrying cost is 16 percent of inventory cost. Ordering cost is $100 per order. Lead time for ordering gowns is 4 days and lead time demand is 200 gowns. The store's owner, Mrs. Fleener, estimates that there is a 40 percent chance that an order will be a day late and a 20 percent chance that it may be 2 days late. To avoid a stockout, the owner likes to carry a safety stock.

g. Using the new estimates of order delivery, calculate again any items in requirements a through /that are impacted by the new order data.

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REQUIRED a. Determine the EOQ for evening gowns. b. Determine the total inventory cost at the EOQ. c. Determine the expected stockout cost. d. Determine the optimal safety stock of evening gowns. e. Compute the reorder point with the safety stock. f. Compute total inventory cost with the safety stock. Computer requirement Mrs. Fleener's assistant has been accumulating some new data on order receiving. His new data suggests there is a 30 percent chance an order will be one day late, a 20 percent chance an order will be two days late, and a 15 percent chance an order will be three days late.