# Question: joe henrys machine shop uses 2500 brackets during the course...

###### Question details

Joe Henry's machine shop uses 2500 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets:

**Annual demand: 2500**

**Holding cost per bracket per year: $ 1.50**

**Order cost per order: $ 18.75**

**Lead time: 10 days**

**Working days per year: 250**

The Accounting department is concerned about Henry’s proposal and favors a periodic review system where orders are placed regularly every four weeks.

- Find the level of the safety stock if the cycle service level is to stay at 98%, z = 2.06.
- Find the number of orders per year and the annual ordering cost.
- Find the average order size and the annual cost of holding the cycle inventory (i.e., excluding the safety stock).
- Find the total annual inventory cost of this system, including the cost of the merchandise and the holding cost of the safety stock.
- You are currently at a reorder point and find that there are exactly 130 units left in stock. How many units should you order?
- Determine the probability that you experience a stockout situation before the current order is delivered.