Responsible for managing inventory of computer desks

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Reference no: EM132153778

Bob Sean, manager at Ikea is responsible for managing the inventory of computer desks. Bob isn't talkative about his inventory, but you have managed to extract the following information from him:

It costs $35 to place an order. Each computer desk costs $31.33. Annual per unit holding cost is 30% of item value. Average daily demand is 100 writing desks. Standard deviation of demand during lead time is 51.96. Lead time to receive a computer desk from a supplier is 3 days. Target service level is 94%. Ikea is open 5 days a week, 52 weeks a year. The company follows a continuos review policy.

a) Please help bob out by determining the order Q, reorder point and the safety stock for computer desks.

i) Order quantity

ii) Reorder point

iii) Safety Stock

b) Bob's supervisor, Sean believes that the service level should be 98%, instead of 94%. and wants bob to reasses the appropriate order quantity and reorder point. Should the order quantity change? Please tell Bob what needs to be recomputed and what the new value would be.

i) Order Quantity

ii) Reorder point

iii) Safety Stock

Reference no: EM132153778

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