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Scenario: The Red Clay Garden Store stocks a profitable line of fertilizers that sell for $9.50 a 50 pound bag. The lead time to order
Scenario: The Red Clay Garden Store stocks a profitable line of fertilizers that sell for $9.50 a 50 pound bag. The lead time to order the fertilizer is 2 weeks. The weekly sales are 1,500 bags and the standard deviation of sales is 200 per week. The physical holding cost for the fertilizer is 20% a year. The fixed cost to order the fertilizer is $10 . The cost to RedClay of a bag of fertilizer is $4.00 . The store is open 52 weeks a year. Red Clay wants an 85% service level (z= 1.0364 ). The cost of money to Red Clay is 30% a year. 1 What is the economic order quantity for RedClay's order of fertilizer? EOQ = 2 What is the safety inventory required for RedClay to have an 85% service level? Isafety 3 What is the reorder point for RedClay for the fertilizer
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