Fixed quantity reorder point system with service cycle level

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Reference no: EM13840608

Demand for widgets is 52,000 widgets/year.

Ordering cost is $50.00 per order. Unit cost is $5.00. The carrying Charge is 20%/year. Demand is 1,000 per week. Lead time is 2 weeks. Standard deviation of demand is 300/week.

1. Calculate a fixed quantity reorder point system with a 95% service cycle level. Explain how it works.

2. Current order quantity is 3,000 units. How much would you save versus old way?

3. Using the same data, calculate a fixed period system with a 90% service cycle level, explain how it works.

Reference no: EM13840608

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