Batteries to customers when the inventory is replenished

Assignment Help Financial Management

Reference no: EM131336118

Weekly demand of packs of AAA batteries in BVE store is normally distributed with a mean of 1,000 and standard deviation of 50. The fixed ordering cost is $130 per order. The inventory holding cost is $1.5 per pack of batteries per year. The replenishment lead time is 2 weeks. The company uses a continuous review policy with order size of 3,000. BVE makes a profit of $1.7 per pack of batteries. Currently, demand during stockout is lost.

(a) What is the optimal CSL?

(b) BVE is considering a plan to backlog customer demand and mail the batteries to customers when the inventory is replenished. It does not offer any discount but the mailing cost is estimated to be $1 per pack of batteries. What is the optimal CSL under this plan?

Reference no: EM131336118

Questions Cloud

What is your best estimate of the aftertax cost of debt : Shanken Corp. issued a bond with a maturity of 20 years and a semiannual coupon rate of 10 percent 4 years ago. The bond currently sells for 97 percent of its face value. What is the company’s total book value of debt? What is the company’s total mar..

About social engagement in their communities : Why or why not corporations should think less about shareholder value and more about social engagement in their communities

How much cash was or generated from investing activities : How much cash was (used) or generated from investing activities? How much cash was (used) or generated from financing activities? What was the net change in cash for Stanley’s Store?

What is company cost of equity capital : David Ortiz Motors has a target capital structure of 45% debt and 55% equity. The yield to maturity on the company's outstanding bonds is 10%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 10.31%. What is the com..

Batteries to customers when the inventory is replenished : Weekly demand of packs of AAA batteries in BVE store is normally distributed with a mean of 1,000 and standard deviation of 50. The fixed ordering cost is $130 per order. BVE is considering a plan to backlog customer demand and mail the batteries to ..

What is profitability ratio and liqidity ratio : What is Profitability Ratio and Liqidity Ratio? and Why would someone chose to look into the Profitability and Liquidity of a Nursing Home?

What is the net interest income earned by bonner bank : Today is Jan. 1, 2016. Bonner Bank has purchased a 5 million one-year Swiss franc (Sf) security that pays 6% interest annually. It has funded the purchase of this investment by accepting a Canadian dollar (CD)-denominated deposit for the equivalent a..

What would be additional funds needed : Broussard Skateboard's sales are expected to increase by 15% from $8 million in 2013 to $9.2 million in 2014. Its assets totaled $4 million at the end of 2013. Broussard is already at full capacity, so its assets must grow at the same rate as project..

User Account

All Pages