Reference no: EM13509413

Using a simplistic approach to inventory issues in order to demonstrate the relationship between order cycles (replinishment) and inventory. There is no variation or uncertainity in demand.

Please provide the steps needed tocalculatethe 5 items for each question with the answers to each.

BASE DATA:

Sales 40 units per day

Order cycle time is 15 days (this is mean time)

Order cycle max time is 21 days (this is part of the variance)

Purchase price per unit is $27 (includes trans costs)

Inventory carrying costs are 19%

 

Question 1: Use Base Data to calculate the following 5 items:

average cycle stock

safety stock

average inventory

inventory investment

inventory carrying costs

 

Question 2: Relative to the base data above reduce the cycle time by 3-days (no change in mean) and calculate the following 5 items:

average cycle stock

safety stock

average inventory

inventory investment

inventory carrying costs

 

Question 3: Relative to base data aboveincrease the cycle time by 3-days (no change in mean) and calculate the following 5 items:

average cycle stock

safety stock

average inventory

inventory investment

inventory carrying costs