SOLVE MANUALLY

Brenda opened a pool and spa store in a lively shop-ping mall and finds business to be booming

but she often stocks out of key items customers want. The 28-ounce bottle of Super Algaecide

(SA) is a high margin SKU, but it stocks out frequently. Ten SA bottles come in each box, and

she orders boxes from a vendor 160 miles away. Brenda is busy running the store and seldom

has time to review store inventory status and order the right quantity at the right time. She

collected the following data:

Demand = 10 boxes per week

Store open 48 weeks/year

Order cost = $40/order

Lead-time = 4 weeks

Item cost = $80/box

Std. deviation in weekly demand = 6

Inventory holding cost = 15% per year

Service level = 90%

Brenda wants to consider setting up a fixed-period inventory system for the 28-ounce bottle of

Super Algaecide (SA) SKU. At the beginning of the current week, D. J. Kole, the materials

manager, checked the inventory level and found 55 units on-hand. There were no scheduled

receipts, and 25 units were on backorder.

a. What is the review period (T) rounded up to a whole number?

b. What is stock replenishment level with safety stock (M)?

c. How many units should be ordered?