Question: A sporting goods company has a distribution center which maintains inventory of fishing rods. The fishing rods have the following demand, lead time and cost

A sporting goods company has a distribution center which maintains inventory of fishing rods. The fishing rods have the following demand, lead time and cost characteristics:

Average demand = 100 units per day, with a standard deviation of 12 units

Average lead time = 12 days with a standard deviation of 2 days

250 days per year

unit cost = $25

desired service level = 95%

Ordering cost = $50

Inventory carrying cost = 20%

The basic question, how many fishing rods should the distribution center carry to provide the desired service level? There are, of course, many other specific questions, such as EOQ? Average cycle stock? Etc.

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