What is the total annual cost for this inventory system

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Reference no: EM131627880

Osprey Sports stocks everything that a musky fisherman could want in the Great North Woods. A particular musky lure has been very popular with local fishermen as well as those who buy lures on the Internet from Osprey Sports. The cost to place orders with the supplier $40/order; the demand averages 5 lures per day, with a standard deviation of 1 lure and the inventory holding cost is 1.00/lure/year. The lead time form the supplier is 9 days, with a standard deviation of 3 days. It is important to maintain a 95 Percent cycle-service level to properly balance service with inventory holding costs. Osprey Sports is open 350 days a year to allow the owners the opportunity to fish for muskies during the prime season. The owners want to use a continuous review inventory system for this item. Refer to the standard normal table for z-values.

a. What order quantity should be used?

(Enter your response rounded to the nearest whole number.)

b. What reorder point should be used? 70 lures. (Enter your response rounded to the nearest whole number.)

c. What is the total annual cost for this inventory system?

Reference no: EM131627880

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