Determining the order quantity-safety stock for writing desk

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Reference no: EM132153791

1) Greg Fletcher, the materials manager at Easy Furniture Inc., is responsible for managing the inventory of writing desks. Greg isn't talkative about his inventory, but you have managed to extract the following information from him: It costs $35 to place an order. Each writing desk costs $31.33. Annual per unit holding cost is 30%of item value. Average daily demand is 100 writing desks. Standard deviation of demand during lead time is 51.96. Lead time to receive a writing desk from a supplier is 3 days. Target service level is 94%. Easy furniture Inc. is open 5 days a week, 52 weeks a year. The company follows a continuous review policy.

a) Please help Greg out by determining the order quantity, reorder point and the safety stock for writing desks.

Order Quantity=

Reorder Point=

Safety Stock=

b) Greg's supervisor, Ralph believes that the service level should be 98%, instead of 94%, and wants Greg to reassess the appropriate order quantity and reorder point. Should the order quantity change? Please tell Greg what needs to be recomputed and what the new value(s) would be.

Order Quantity=

Reorder Point=

Safety Stock=

Reference no: EM132153791

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