Question: 3 . Weekly demand for Lego at a Wal - Mart store is 2 5 0 0 boxes. The replenishment lead time is two weeks;

3. Weekly demand for Lego at a Wal-Mart store is 2500 boxes. The replenishment lead time is two weeks; the cost of ordering is $ 231 and cost of holding (per item per year) is 20% of item cost, which is $3 per unit. We are assuming there are 52 weeks in one year.
a. Find the economic order quantity (round to the nearest thousand), reorder point, time between orders, average inventory level, and total annual variable cost, assuming there is no uncertainty in demand.b. Use a continuous review approach. Use EOQ as the order quantity. Find the reorder point, order-up-to level, safety stock quantity, average inventory level, and total annual variable cost, assuming demand is normally distributed with a weekly average of 2500 and a weekly standard deviation of 500 and a desired service level of 90%. Compare total cost you find to that in part 1. What is the difference in cost?
c. Now use a periodic review approach with the periodicity derived from the initial EOQ analysis in part 1. Find the safety stock, order-up-to level, average inventory level, and total annual variable cost with the same average demand and standard deviation of weekly demand, and the same desired service level as in part 1. Compare the total cost to those in parts 1 and 2, what are the differences?
d. Comment on your findings.

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