What is the optimal order up to level

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Reference no: EM131035996

You are the store manager at a large furniture store. One of your products is a study desk. Weekly demand for the desk is normally distributed with a mean of 40 and a standard deviation of 20. The lead time from the assembly plant to your store is 2 weeks and you order inventory replenishments weekly. You use the order up to model to control inventory.

A - Suppose your order up to level is S=220. You are about to place an order and note that your inventory level is 100 and you have 85 desks on order. How many desks will you order?

B - Suppose your order up to level is S=220 you are about to place an order and note that your inventory level is 160 and you have 65 desks on order. How many desks will you order?

C - What is the optimal order up to level if you want to target a 98% in stock probability?

D - Suppose your order up to level is S=120. What is your expected on hand inventory?

E- Suppose your order up to level is S=120. Your internal cost of capital is 15% and each desk costs $200. What is your total cost of capital for the year for inventory in the store?

Reference no: EM131035996

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