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Camel City Trumpets also sells ski masks on the side and expects to sell 32,000 ski masks this year (talk about diversifying!), but demand is
Camel City Trumpets also sells ski masks on the side and expects to sell 32,000 ski masks this year (talk about diversifying!), but demand is seasonal and can be uncertain. As a result, stockouts are possible and are estimated to cost $30 per order cycle. Camel acquires the masks for $24.00 each from Jim's Sportswear. Jim's charges $12 for processing each order. Todd estimates that Camel's inventory carrying cost is 15 percent annually. a. Find Camel's EOQ for ski masks (When calculating, round up to the nearest whole number for EOQ). b. Using the following information what is the appropriate level of safety stock for an 84.13% probability of being in stock during the order cycle (1 std. dev)? What about a 97.72% probability (2 std. devs)? What about a 99.87% probability (3 std devs)? Average lead-time (replenishment cycle) in days = 15 standard deviation of lead-time = 3 Average daily demand = 135 Standard deviation of demand = 4 c. What is the ROP in units using the safety stock you calculated in part 5.b. at 84.13%? d. What is the ROP in units using the safety stock you calculated in part 5.b. at 97.72%
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