Explain what is the eoq and what should be the safety stock

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Reference no: EM1369774

An ophthalmologist's office operates 52 weeks per year. It purchases disposable contact lenses for $11.70 per pair. The following information is available about these lenses.

Demand = 90 pairs/week
Order cost = $54/order
Annual holding cost = 27% of purchasing cost
Desired cycle-service level = 80%
Lead time = 3 weeks
Standard deviation of weekly demand = 15 pairs
Current on-hand inventory is 320 pairs, with no open orders or backorders.

Currently, the company uses a continuous review system,

a. What is the EOQ?

b. What should be the safety stock? What should the reorder point be?

c. An inventory withdrawal of 10 pairs was just made. Is it time to reorder?

Reference no: EM1369774

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