The Blast company prices GC game consoles at $450 per unit. GameCore sells the GC's at $675. Annual demand at this retail price turns out to be 250,000 units. GameCore incurs ordering, receiving, and transportation costs of $20,000 for each lot of GC's ordered. The annual holding cost used by the retailer is 15 percent.

A. What is the optimal lot size that GameCore should order?

B. The Blast company has discounted GC's by $30 for the short term (about the next two weeks). Game Core has decided not to change the retail price but may change the lot size ordered from Blast. How should GameCore adjust its lot size given this discount? How much does the lot size increase because of the discount?

Assuming there are 50 weeks in a year, weekly demand for GC game consoles is normally distributed, with a mean of 5,000 and a standard deviation of 400. The store manager continuously monitors inventory and currently orders 18,000 printers each time the inventory drops to 16,000 printers. Blast currently takes 3 weeks to fill an order.

C. How much safety inventory does the store carry? What CSL does GameCore achieve as a result of this policy? What fill rate does the store achieve?

D. Assume that the supply lead time from Blast is normally distributed, with a mean of 3 weeks and a standard deviation of 2 weeks. How much safety inventory should GameCore carry if they want to provide a CSL of 95 percent?

Answer rating: 100% (QA)

A To calculate the optimal lot size that GameCore should order we can use the Economic Order Quantity EOQ formula EOQ sqrt2 Annual Demand Ordering Cost Holding Cost Given Annual Demand 250000 units Or... View the full answer