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Crew Soccer Shoes Company is considering a change of their current inventory control system for soccer shoes. The information regarding theshoes is given below.Average demand = 200 pairs/weekLead time = 3 weeksOrder cost = $65/orderHolding cost = $4.00/pair/yrDesired service level = 95 percentStandard deviation of weekly demand = 50Number of weeks per year = 52
The company decides to use a fixed order quantity system.
1.What is the economic order quantity?
2.What should be the reorder point to have a 95 percent service level? Explain how the system will operate.
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