Safety stock and reorder point if desired service level

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Reference no: EM131375161

Huckaby Motor Services, Inc. rebuilds small electrical items such as motors, alternators, and transformers, all using a certain type of copper wire. The firm's demand for this wire is approximately normal, averaging 20 spools per week, with a standard deviation of 6 spools per week. Cost per spool is $24; ordering costs are $25 per order; inventory handling cost is $4.00 per spool per year. Acquisition lead time is four weeks. The company works 50, 5-day weeks per year.

a. What is the optimal size of an order, if minimization of inventory system cost is the objective ?

b. What are the safety stock and reorder point if the desired service level is 90% ?

Reference no: EM131375161

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