Your company imports decorative planters from Italy. Weekly demand is 1,500 units on average, with a standard deviation of 800. Each planter costs you $10, and the holding cost per year is 25%. You are using a distribution center in Arizona, and fixed transportation costs from Italy is $10,000 per order. Consider a 52-week/year operations. Consider a periodic review policy with base stock level of 9,000 units. If the current inventory position is 7,000 units when you are about to order (similar to the idea of reorder point under continuous review), what should be your order quantity?

Your company imports decorative planters from Italy. Weekly demand is 1,500 units on average, with a standard deviation of 800. Each planter costs you $10, and the holding cost per year is 25%. You are using a distribution center in Arizona, and fixed transportation costs from Italy is $10,000 per order. Consider a 52-week/year operations. Consider a periodic review policy with base stock level of 9,000 units. If the current inventory position is 7,000 units when you are about to order (similar to the idea of reorder point under continuous review), what should be your order quantity?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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