Question: Problem statement (Inventory Management) A retailer keeps an inventory for its bestselling SKU. The weekly rate of demand for the SKU is horizontal and random.

Problem statement (Inventory Management) A

Problem statement (Inventory Management) A retailer keeps an inventory for its bestselling SKU. The weekly rate of demand for the SKU is horizontal and random. The mean value of weekly demand is 200 units/week, and the standard deviation of the weekly demand is 25 units/week. The order's shipment lead-time is 2 weeks. We assume there are 50 weeks in a year. The ordering cost is $500/order. The inventory holding cost is $15 per unit per year. Use this information to answer the questions in Part I and Part II of this problem. The normal distribution table is in Appendix of the Textbook. Suppose that the manager of the retailer uses the Continuous Review (Q) system to manage the inventory. The retailer aims at the cycle service level of 95%. Answer the following questions. (Please round all intermediate calculations to two decimal places.) To meet the cycle service level requirement, the manager must set the Reorder Point (ROP) to be or higher (Please report your answer as the whole number.) Suppose that the retailer uses the order quantity of Q=720/order. The annual total inventory holding and ordering costs of this inventory system are: (Please report your answer with two decimal places.) Suppose that the manager accidentally set Reorder Point (ROP) to be 440. The probability of stockout during an inventory cycle is ____ %. (Please report your answer with one decimal place.)

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!