Inventory management plan for fluorescent bulbs

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Reference no: EM131029076

Phoenix Valley Lighting is preparing an inventory management plan for fluorescent bulbs. They have a forecasted demand of 9,255 bulbs per month with a MAD of 229 bulbs per month. The lead time to receive bulbs is 3 week and they would like to have a 83% service level to avoid turning away customers. Their ordering cost is $556 and their holding cost is $4 per bulb (breakage)per year.

When doing all calculations assume that there are 4 weeks in 1 month and there are no other contractual requirements on order quantities or frequencies.

If following a fixed order quantity inventory management system, what should their order quantity be? Report your answer to two decimal places.

Reference no: EM131029076

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