What is stock replenishment level with safety stock

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Reference no: EM133612271

Problem

Brenda opened a pool and spa store in a lively shopping mall and finds business to be booming but she often stocks out of key items customers want. The 28-ounce bottle of Super Algaecide (SA) is a high margin SKU, but it stocks out frequently. Ten SA bottles come in each box, and she orders boxes from a vendor 160 miles away. Brenda is busy running the store and seldom has time to review store inventory status and order the right quantity at the right time. She collected the following data:

Demand = 11 boxes per week	Store open = 48 weeks/year
Order cost = $70/order	Lead-time = 3 weeks
Item cost = $140/box	Std. deviation in weekly demand = 4
Inventory-holding cost = 15 percent per year	Service level = 96 percent

Brenda wants to consider setting up a fixed-period inventory system for the 28-ounce bottle of Super Algaecide (SA) SKU. At the beginning of the current week, D. J. Kole, the materials manager, checked the inventory level and found 75 units on-hand. There were no scheduled receipts and 30 units were on backorder.

Question 1. What is the review period (T)? Do not round intermediate calculations.

Question 2. What is stock replenishment level with safety stock (M)? Do not round intermediate calculations.

Question 3. How many units should be ordered? Do not round intermediate calculations.

Reference no: EM133612271

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