Southern Office Supplies Inc. distributes office supplies to customers in the Southeast. One popular SKU is laser printer paper. Ordering costs are $48.00 per order. One ream of paper costs $4.10, and Southern uses a 20 percent annual inventory-holding cost rate. The average annual demand is 16,500 reams and historical data shows that the standard deviation of weekly demand is about 72. The lead time from the manufacturer is 2 weeks. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet Questions

1. What is the minimum-cost economic order quantity? Round your answer to the nearest whole number. fill in the blank

2. What is the annual ordering cost for the EOQ? Use the rounded EOQ value in your calculations. Round your answer to the nearest cent. $ fill in the blank

3. What is the annual inventory holding cost for the EOQ? Use the rounded EOQ value in your calculations. Round your answer to the nearest cent. $ fill in the blank

4. What is the total annual cost for the EOQ? Use the rounded EOQ value in your calculations. Round your answer to the nearest cent. $ fill in the blank

5. Assuming that there are 52 weeks in a year what is the average demand during the lead time? Round your answer to two decimal places. fill in the blank

6. What is the standard deviation of demand during the lead time? Round your answer to two decimal places. fill in the blank

7. What is the safety stock with a 95 percent service level? Round your answer to two decimal places. fill in the blank

8. What is the reorder point with safety stock? Round your answer to the nearest whole number. fill in the blank
 

Transcribed Image Text:

Average Annual Demand 16,500.00 $48.00 $4.10 0.20 2.00 52 72.00 0.95 Ordering Cost Unit Cost Carrying Charge Rate Lead time (weeks) Weeks in a year Standard deviation of weekly demand Service level Economic Order Quantity (to whole number) Order cost Inventory cost Total cost Average demand during lead time Standard deviation during lead time z-value Safety stock Reorder point Formulas #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Average Annual Demand 16,500.00 $48.00 $4.10 0.20 2.00 52 72.00 0.95 Ordering Cost Unit Cost Carrying Charge Rate Lead time (weeks) Weeks in a year Standard deviation of weekly demand Service level Economic Order Quantity (to whole number) Order cost Inventory cost Total cost Average demand during lead time Standard deviation during lead time z-value Safety stock Reorder point Formulas #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A

Answer rating: 100% (QA)

1 The minimumcost economic order quantity is the order quantity that minimizes the sum of ordering costs and inventory holding costs Using the given f... View the full answer