Inventory problems 1. Agrocery store sells approx. 3600 1 pint packs of frozen strawberries per year. Annual holding cost is $6.00 per pack and reordering cost is $50.00 per order. The store is open daily. Lead time for orders of the strawberry packs is four days and the standard deviation of daily demand is three packs. a) What is the EOQ? b) What is the annual cost of holding inventory when using the EOQ? c) What is the annual cost of ordering inventory when using the EOQ? d) How long can the store expect a, just arrived, order of strawberries to stay in the freezer before another order is placed? (l.e., what is the average time between orders or TBO?) 2. Using data from problem 1 determine: a. The safety stock needed to attain a 5 percent risk of stockout during lead time b. The ROP that will provide a risk of stockout of 5 percent during lead time. c Would a stockout risk of 10 percent require more or less safety stock than a 5 percent risk? Explain d. Would the ROP be larger, smaller, or unchanged if the acceptable risk were 10 percent rather than 5 percent. Explain. 3. Ned's Natural Foods sells unshelled peanuts by the pound. Historically, Ned has observed that daily demand is normally distributed with a mean of 4900 pounds and a standard deviation of 100 pounds. Lead time is 9 days. What ROP would provide a stockout risk of 1 percent during lead time? 4. The grocery store from number 1 (above) wants to move to a fixed order cycle for its frozen fruit. The manager wants a service level of 0.95. The frozen fruit distributor delivers once weekly (52 weeks per year) and requires the order quantity to be entered in their system 2 days ahead of delivery. a) What is the Target Inventory level (aka Stocking Level)? b) If 15 packs of the strawberries are on hand when an order is to be placed, how much should be ordered?

1. Agrocery store sells approx 36001 pint packs of frozen strawberiles per vear. Annual holdins cost is $6.00 per pack and reordering cost is $50.00 per order. The store is open dally. Lead time for orders of the strewberiy packs is four days and the standard devlation of dally demand is three packs a) What is the EOC? b) What is the annual cost of holding Inventory when using the EOC? d) What is the annual cost of ordering inventory when using the EOC? d) How long can the store expecta, Just arived, order of strowberies to stay in the freezer before another order is placed? (Le, what is the average time between orders or TBOn) 2. Using date from problem 1 determine: a. The safety stock needed to attain 5 percent risk of stockout during lead time b. The ROP that will provide a risk of stockout of 5 percent during lead time. c. Would a stockout risk of 10 percent require more or less safety stock than a 5 percent rist? Epplain d. Would the ROP belarger, smaller, or unchanged if the acceptable risk were 10 percent rether than 5 percent. Explain. 3. Ned's Natural Foods sells unshelled peanuts by the pound. Historically, Ned has observed that dally demand is normally distributed with a mean of 4900 pounds and a standard devation of 100 pounds. Lead time is 9 days. What ROP would provide a stockout fisk of 2 percent durins lead time? 4. The erocery store from number 2 (above) wants to move to a fxed order cyde for its frozen finule. The manager wants a servica level of 0.95 . The frozen frult distributor dellivers once weelly (52 weeks per year) and requires the order quantily to be entered in thelr system 2 das ahead of dellvery. a) What is the Target inventory level (ala stocking tevel)? b) If 15 pacts of the strawberiles are on hand when en order is to be placed, how much chould be ordered? 1. Agrocery store sells approx 36001 pint packs of frozen strawberiles per vear. Annual holdins cost is $6.00 per pack and reordering cost is $50.00 per order. The store is open dally. Lead time for orders of the strewberiy packs is four days and the standard devlation of dally demand is three packs a) What is the EOC? b) What is the annual cost of holding Inventory when using the EOC? d) What is the annual cost of ordering inventory when using the EOC? d) How long can the store expecta, Just arived, order of strowberies to stay in the freezer before another order is placed? (Le, what is the average time between orders or TBOn) 2. Using date from problem 1 determine: a. The safety stock needed to attain 5 percent risk of stockout during lead time b. The ROP that will provide a risk of stockout of 5 percent during lead time. c. Would a stockout risk of 10 percent require more or less safety stock than a 5 percent rist? Epplain d. Would the ROP belarger, smaller, or unchanged if the acceptable risk were 10 percent rether than 5 percent. Explain. 3. Ned's Natural Foods sells unshelled peanuts by the pound. Historically, Ned has observed that dally demand is normally distributed with a mean of 4900 pounds and a standard devation of 100 pounds. Lead time is 9 days. What ROP would provide a stockout fisk of 2 percent durins lead time? 4. The erocery store from number 2 (above) wants to move to a fxed order cyde for its frozen finule. The manager wants a servica level of 0.95 . The frozen frult distributor dellivers once weelly (52 weeks per year) and requires the order quantily to be entered in thelr system 2 das ahead of dellvery. a) What is the Target inventory level (ala stocking tevel)? b) If 15 pacts of the strawberiles are on hand when en order is to be placed, how much chould be ordered