Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Brenda opened a pool and spa store in a lively shopping mall and finds business to be booming but she often stocks out of key
Brenda opened a pool and spa store in a lively shopping mall and finds business to be booming but she often stocks out of key items customers want. She decides to experiment with inventory control methods, such as using a continuous review (fixed-order quantity) and/or periodic review (fixed-order period) system. The 28-ounce bottle of Super Algaecide (SA) is a high margin SKU, but it stocks out frequently. Ten SA bottles come in each box, and she orders boxes from a vendor 160 miles away. Brenda is busy running the store and seldom has time to review store inventory status and order the right quantity at the right time. She collected the following data: Demand Order cost 12 boxes per week $40/order Item cost $80/box Inventory-holding cost 15 percent year Store open 48 weeks/year Lead-time 5 weeks Std. deviation in weekly demand-6 Service level 98 percent a. What is the economic order quantity (EOQ) rounded to the next highest number? Round to the nearest whole number. 62 bottles b. What is the reorder point for SA with safety stock? Use Appendix A to determine 2-value. Round 2-value to two decimal places. Do not round intermediate calculations. Round your answer to one decimal place. 71.2 bottles c. What is the average number of orders per year using the EOQ? Do not round intermediate calculations. Round your answer to two decimal places. 9.29 orders/year
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started