How much safety stock should the company hold

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Reference no: EM132255886

Daily sales = 275 units Cost of capital = 25% Std. deviation of daily demand = 44 Inventory Risk = 1% Cost to place an order = $26 Storage space = 5% Freight cost = $225 Insurance = .5% Avg. Inventory (last 12 months) = 2,500 units Current number of warehouses = 16 Cost of 1 unit of inventory = $100 Prime interest rate = 3.6% Cost of Goods Sold = $4,000,000 Taxes = 1.5% Selling price of 1 unit = $200 Average annual depreciation = 15% Avg. replenishment cycle = 12 days Std. dev. of replenishment cycle = 2 days Average inventory value = $250,000 Forecast error = 13% Re-stock fee is $45 Days in a year = 360

B) How much safety stock should the company hold if it wants to ensure a 98.3 service level?

Reference no: EM132255886

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How much safety stock should the company hold : Daily sales = 275 units Cost of capital = 25% How much safety stock should the company hold if it wants to ensure a 98.3 service level?

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