What is the average annual inventory level

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Reference no: EM132242724

Acme sells part X which has a cost of $60 each and which they sell for $100. Monthly demand is 1,000 items, with a monthly standard deviation of 150. Acme calculates the cost to place an order for the materials needed to make part X is $40. The inventory carrying cost is 10% / year. Acme uses the ROP system to manage part X inventory. Management wants to assure a 92% service level. The lead-time from the supplier is 1 month. a. What is the EOQ? b. What is the ROP? c. How many times in a year will part X be re-ordered? d. What is the average annual inventory level for part X.

Reference no: EM132242724

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