Question: Under the ordering policy currently in use , what is the average cycle stock inventory level and the average annual carrying cost ? PROVIDE
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Under the ordering policy currently in use, what is the average cycle stock inventory level and the average annual carrying cost?
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Daily demand for an an inventory item is normally distributed with average value of 31 units per day The standard deviation of daily demand is 4 The item is used 365 days per year We buy the item for $50 per unit Each time we order, we incur fixed ordering costs of $175 per order Our annual carrying cost rate is 25% When we order replenishment inventory, the order lead time is 4 days The ordering policy currently being used is: Whenever inventory position falls to R=140 units, an order is placed for Q=840 units
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