Refer to Problem. Average weekly demand for free-range dog biscuits is 80 bags per week, with a standard deviation of 16 bags. Olla uses a continuous inventory review system to manage inventory of the biscuits. Olla wants to set the reorder point high enough that there is only a 5% percent chance of running out before the next order comes in. Assuming the lead time is a constant 2 weeks, what should the reorder point be?
Problem:
Ollah’s Organic Pet Shop sells about 4,000 bags of free-range dog biscuits every year. The fixed ordering cost is $15, and the cost of holding a bag in inventory for a year is $2. What is the economic order quantity for the biscuits?
No comments:
Post a Comment