Question

 

Daily sales = 325 units                                                Cost of capital = 22.5%

Std. deviation of daily demand = 39                           Inventory Risk = 1.5%

Cost to place an order = $30                                      Storage space = 5.5%

Freight cost = $250                                                     Insurance = 0.75%

Avg. Inventory (last 12 months) = 2,750 units           Current number of warehouses = 24

Cost of 1 unit of inventory = $125                              Prime interest rate = 3.9%

Cost of Goods Sold = $14,828,125                              Taxes = 1.25%

Selling price of 1 unit = $250                                      Average annual depreciation = 15.5%

Avg. replenishment cycle = 11 days                           Std. dev. of replenishment cycle =3 days

Average inventory value = $343,750                          Forecast error = 12.5%

Re-stock fee is $55                                                      Days in a year = 365

                                   

1. What is the ICC%?(to the nearest tenth of a percent)

 

2. What is the value of R? (in the EOQ formula)

 

3. What is the value of V?

 

4. What is the value of S? (to the nearest cent)

 

5. What is the value of Q?

 

6. If the company plans to close 12 of their warehouses over the next 12 months, how much inventory should they expect to have a year from now?

 

7. How much safety stock should the company hold if it wants to ensure a 98.3% service level?

 

Answer 1