Company decides to use a fixed-order-quantity system

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Reference no: EM13762079

Crew Soccer Shoes Company is considering a change in its curent inventory control system for soccer shoes. The information regarding the shoes is as follows:

Average Demand: 200 pairs/week

Lead Time: 3 weeks

Order Cost: $65/order

Unit Cost: $20

Carrying Charge Rate: 0.20

Desired Service Level: 95 percent

Standard Deviation of Weekly Demand: 50

Number of weeks per year: 52

The company decides to use a fixed-order-quantity system. What is the economic order quantity? What should be the reorder point to have a 95 percent service level? Explain how the system will operate.

Reference no: EM13762079

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