Distribution center carry to provide desired service level

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Reference no: EM132220176

Inventory management problem

A sporting goods company has a distribution center which maintains inventory of fishing rods. The fishing rods have the following demand, lead time and cost characteristics:

Average demand = 100 units per day, with a standard deviation of 12 units

Average lead time = 12 days with a standard deviation of 2 days

250 days per year in the business year

unit cost = $25

desired service level = 95%

Ordering cost = $50

Inventory carrying cost = 20%

How many fishing rods should the distribution center carry to provide the desired service level?

What is the EOQ?

What is the total acquisition cost (please include the annual product cost in your calculations)?

Please show the math in details

Reference no: EM132220176

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