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Safety Stock and Reorder Point Consider the following data. Inventory Item Average Demand (Annual) Sigma (Std. Dev.) of Demand During Lead Time Item Unit Cost F-11001

Safety Stock and Reorder Point

Consider the following data.

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Based on the below data:

  • Calculate the safety stock quantities and the inventory cost associated with safety stock (based on the item unit cost) for the inventory items at four different service levels (50%, 80%, 90%, and 95%). Business & Finance homework help.
  • Develop a table to present the inventory quantities and the safety stock costs at each service level.
  • Assuming that demand occurs at a steady pace every month (in other words, there is no seasonality or cyclical change in the level of demand), calculate the reorder point for each item assuming a lead time of two months and a service level of 90%.
  • Develop a table to present the reorder points for all products under these conditions (two month lead time and service level of 90%).

Inventory Item         Average Demand (Annual)     Sigma (Std. Dev.) of Demand During Lead Time      Item Unit Cost

F-11001                            15,000                                                           100                                                            $250.00

K-12002                            100,000                                                         300                                                             $2.00

L-13003                            250,000                                                         200                                                             $0.20

N-14004                          300,000                                                          400                                                             $1.00

P-21001                            50,000                                                            60                                                              $125.00

S-22002                           80,000                                                             75                                                             $30.00

Note: All items are independent demand items.

Submission Details:

  • Submit your report in a two- to three-page Word document, using APA style. Business & Finance homework help.

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