Question

Crew Soccer Shoes Company is considering a change in its current inventory control system for soccer shoes. The information regarding the shoes is as follows: Average demand = 200 pairs/week Lead time = 4 weeks Order cost = $60/order Unit cost = $16.50 Carrying charge rate = 0.30 Desired service level = 95 percent Standard deviation of weekly demand = 35 Number of weeks per year= 52 The company decides to use a fixed-order-quantity system. What is the economic order quantity? What should be the reorder point to have a 95 percent service level? Use Appendix A to determine z-value. Round z-value to two decimal places. Do not round any other intermediate calculations. Round your answers to the nearest whole number. Economic order quantity: pairs Reorder point: pairs

Answer 1

The answer is

EOQ= 502

ROP = 916

THE DETAILED ANSWER IS BELOW

Answer EOQ = Economic order quantity ROP = Reorder point Average demand = 200 pair/week . Annual demand a 200852 D = 10400 order cost = co= $60 (ordee. anit cost = C =$16.5 Holding cost = cx caraying charge role = 16.5 x 0.30 H = 4.95 * EOQ=J2 COP H 11248000 2x box totoo 4.95 4.95 -J252121.212 = 802.11 a 502 EOQ = 502 1 MO cs Scanned with CamScanner

hop=dLT + zod J LT Cihele a = weekly demand = 200 pair. LT= Lead time = 4 weeles z = 1.65 (95% service level, from table under sta Standard normal cone) od = standard deviation a 35 : ROP = 2 LT + z asLT - 200 x4 + 1-65X35 XJ 4 = 800 + 115.5 = 915-5 2916 I Rop= 916 CS Scanned with CamScanner

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