[09/08, 10:15 am] Burger: Always include units with answers and calculate to two decimal places. State units and round if applicable.

overline ROP = d * dLT + SS

2000 Inventory Turns = Cost of Goods Sold/ Inventory Value H

Weeks Supply Inventory Value / Average Weekly Cost of Goods Sold

OR=# of weeks/turns

Management at Nucom Digital Services (NDS) would now like you to look at its inventory control practices at its current distribution centre that services Ontario and Eastern Canada. NDS sells 375 hardware packages per day and they are open every day for 50 weeks of the year. NDS sources its hardware from its parent supplier located in Hartford, Connecticut. The hardware provided by this supplier is only available to the Canadian market through NDS.

They know the holding cost is $20 per hardware package and each time they order it costs them $105. The lead time from the supplier in Hartford is 7 days (1 week). They usually carry $1,440,550 in stock and each hardware package costs $150 with a selling price of $245. They have chosen to carry an extra 275 hardware packages...just in case.

For each of these, you MUST show all of your calculations. Calculate to two decimals then round (if applicable) and state units.

They have asked you to determine the following:

a) What is the current Inventory Turns and Weeks Supply as of today? (8 marks)

[09/08, 10:16 am] Burger: b) What is the Weeks Supply on hand as of today? (3 marks)

c) They use perpetual inventory counting. At what inventory level should they reorder hardware packages? (4 marks)

d) What quantity should they reorder each time? (8 marks)

[09/08, 10:16 am] Burger: e) Examine their current safety stock policy. Would you recommend it be higher or lower? Explain your reasoning with two points/reasons to justify your safety stock policy recommendation. Include all related savings/or costs that will be incurred. Ste all assumptions as required. (4 marks)

In addition to their safety stock policy, explain one additional significant inventory management change they could make. Quantify the savings or additional costs. (3 marks)