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1) Consider the following inventory problem:
The Average Monthly Demand is 400.
The Standard Deviation of Monthly Demand is 45.
The Lead Time from order placement to order receipt is 0.75 months.
The desired service level is 95%.
The Set Up Cost (or Cost per Order) is $150 per order.
The Holding Cost is $4 per item per year.
If ordering the Economic Order Quantity (EOQ), what will be the average inventory with safety stock?
2) Use the following data for this Forecasting Problem and use the Exponential Smoothing Forecast Technique with an alpha value of 0.75.
What is the MAD for this forecasting method considering periods 2 through 5?
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An analysis of the holding costs, including the appropriate annual holding cost rate.
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