What is dyson annual cost of holding cycle stock

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Reference no: EM131793306

Dyson specializes in repairing vacuum cleaners. Dyson receives weekly deliveries from its vacuum cleaner belt supplier, who replenishes belts up to a level that Dyson appliance is free to specify. Dyson buys a very popular belt at a unit price of $17.50. The annual inventory carrying charge is 20%. Weekly demand for belts is normally distributed with mean 86 and standard deviation 24. Dyson management wants to limit the probability of a stock-out on any given week not to exceed 1%.

(a) What replenishment level would you recommend?

(b) What is Dyson' average level of safety stock?

Reference no: EM131793306

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