A sporting goods company has a distribution center that maintains inventory of fishing rods. The fishing rods have the following demand, lead time, and cost characteristics:
Average demand = 230 units per day, with a standard deviation of 22 units
Average lead time = 22 days with a standard deviation of 1 day
250 days per year
Unit cost = $30
Desired service level = 97.5%
Ordering cost = $57
Inventory carrying cost = 20%
Required:
a. What is the standard deviation of demand during lead time? (Round up your answer to the next whole number.)
b. How much safety stock should be carried? (Round up your answer to the next whole number.)
c. Calculate EOQ. (Round up your answer to the next whole number.)
d. Calculate annual ordering cost. (Round your answer to 2 decimal places.)
e. Calculate annual inventory carrying cost. (Round your answer to the nearest dollar amount.)
f. Calculate annual product cost. (Round your answer to the nearest dollar amount.)
g. Calculate total cost. (Round your answer to 2 decimal places.)
h. Calculate average cycle stock.
i. Calculate average inventory.