1. Business
  2. Business Management
  3. question 5 inventory management 2 a company plans to have...

Question: question 5 inventory management 2 a company plans to have...

Question details

Question 5: Inventory Management  2) A company plans to have their order strategy evaluated. The current demand is normal distributed with ~N(6267, 385) every four weeks, the cost for each order is of AUD 15 per order, the annual holding cost factor is 10% and the price per unit is AUD 21. Assume that the year has 52 weeks. a. Currently, they order 110 items with each order. Argue if this order quantity is a good choice or if it should be changed? b. Assume a lead time of 1 week and Service Level of 95%. What would you recommend as a safety stock? c. If you change the lead time to 6 days, does the safety stock increase or decrease? Explain your answer. 

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution