What is the yearly average cycle inventory for this item

Assignment Help Operation Management

Reference no: EM131151166

Inventory Control Problem Johnson Corporation has the following information about a product (SKU) that it carries in stock: Average demand = 40 units per day The business year has 300 days Order lead time = 15 days Item cost = $50 per unit Ordering cost = $ 30 per order (regardless of the order size) Inventory annual carrying cost = 20% Standard deviation for demand during lead time = 100 units Desired cycle service level = 97.5% Using continuous review inventory policy (Q system).

1. What is the optimal order size for the company to minimize their annual inventory cost for this item?

2. What is the yearly average cycle inventory for this item?

3. How much safety inventory do they need to keep? What is the reorder point (ROP)?

4. Suppose the company uses a two-bin system to carry the inventory for this item. How much inventory should they vary in the secondary bin? How much should they carry in the first bin?

5. How much transportation inventory do they carry year-around?

6. How much total inventory do they carry for this item? What is the annual inventory keeping cost for this item?

Reference no: EM131151166

Questions Cloud

Benefits of businesses working together on a global scale : Write a 300 word discussion on the benefits of businesses working together on a global scale to survive and discuss the three main aspects of business that companies need to successfully understand before entering a foreign market. The three aspe..

Explain whether the ratio is positive or negative : Calculate the cost-benefit ratio. Explain whether the ratio is positive or negative. If positive, explain if you would replace a portion of the coal-burning operation or the whole operation? Why or why not?

The supplier behind defective air bags : Takata Airbag Quality Takata Corp., the supplier behind defective air bags in millions of recalled vehicles, lacks clear processes for tackling potential safety defects and needs improved manufacturing methods, an independent panel found. Takata empl..

How are responsibility centers used to incentivize managers : How are responsibility centers used to incentivize managers? In a theft investigation, does John Doe's signature on a document mean that John Doe signed it?

What is the yearly average cycle inventory for this item : Inventory Control Problem Johnson Corporation has the following information about a product (SKU) that it carries in stock: What is the optimal order size for the company to minimize their annual inventory cost for this item? What is the yearly aver..

Determine the minimum sampling rate : Determine the minimum sampling rate required to avoid aliasing. - what is the discrete time signal obtained after sampling?

What the financial statement disclosed about the inventory : With this information, I turned back to my Module 3 financial statement from CVS Health to see what the financial statement disclosed about their inventory methods

How to create a convenient free station control point : On a busy construction site, most control stations are blocked from a proposed area of layout. Describe how to create a convenient free station control point using resection techniques.

Supply chain strategies : Supply chain strategies, and what considerations the managers need to make, why do you believe it is important of understand this considerations? What can happen if you don’t take in these considerations?

User Account

All Pages