The website, “Marvin’s Golf Hut.com”, is the largest national retailer of the “GOLONG” golf ball. They are trying to determine the inventory policy for “boxes” of GOLONG balls. Each box has a dozen balls, but for this analysis consider “boxes” and not individual golf balls. It is estimated that the website will sell 1034423 boxes of balls this year, and since it is a website, we operate 365 days a year.

Marvin is one of the exceptionally large customers for Par Inc.’s GOLONG golf balls, so he gets a reduced price of $20.00 per dozen and Par Inc. only charges him $5.00 to place an order. Marvin also gets expedited delivery at no extra charge, and Par Inc. promises that any order delivered to Marvin’s warehouse will have a lead-time of only 3 working days: 1day to receive the order, 1 day to process the order, and then 1 day to ship to the warehouse. In addition, every order is “guaranteed” to be 100% correct.

Marvin’s warehouse manager, Mr. Marvin the Martian, estimates that the per-unit holding cost is 5% of the price we paid for each dozen.

What is the most efficient order size?

What is the number of orders per year?

What is the amount of time between orders?

Identify and briefly explain the “3 Budgets of Inventory”.

Determine the re-order point for the GOLONG golf ball?

Assume the standard deviation of Marvin’s inventory is 300 boxes. What is the “safety stock” at the 90th and 95th percentile? What is the probability of stockout if the safety stock policy is only 200 boxes?

Answer rating: 100% (QA)

1 Most Efficient Order Size Economic Order Quantity EOQ 2 RU OC EOQ UC ... View the full answer