Moo-IQ distributes boxes of canned calf brains. Moo-IQ receives monthly deliveries from its supplier, who replenishes the boxes up to a level that Moo-IQ is free to specify. Moo-IQ buys the boxes at $450 each and sells them for $600 each to its wholesaler customers. The annual inventory carrying charge is 20%. Monthly demand of boxes is normally distributed with mean 3,500 and standard deviation 400. Moo-IQ's management wants to limit the probability of a stock-out on any given month to to 9%.

 (a) [2] What value of a replenishment level would you recommend? 

(b) [2] What is Moo-IQ's annual cost of holding safety stock?

Answer rating: 100% (QA)

MooIQ Inventory Management a Recommended Replenishment Level To find the recommended replenishment l... View the full answer