Question: Phoenix Valley Lighting is preparing an inventory management plan for fluorescent bulbs. They have a forecasted demand of 1 1 , 4 6 5 bulbs

Phoenix Valley Lighting is preparing an inventory management plan for fluorescent bulbs.
They have a forecasted demand of 11,465 bulbs per month with a MAD of 208 bulbs per month. The lead time to receive bulbs is 1 week and they would like to have a 93% service level to avoid turning away customers. Their ordering cost is $492 and their holding cost is $1 per bulb (breakage)per year.
When doing all calculations assume that there are 4 weeks in 1 month and there are no other contractual requirements on order quantities or frequencies.
If following a fixed order quantity inventory management system, what should their order quantity be? Report your answer to two decimal places.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!