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In: Accounting

A discount appliance store sells iPhones. The store purchases iPhones at a price of $95 per...

  1. A discount appliance store sells iPhones. The store purchases iPhones at a price of $95 per unit. The following information applies to this product.

  2. Demand = 20 units/day
  3. Order cost = $56/order
  4. Annual holding cost = 25% of purchase price
  5. Desired cycle-service level = 90% (z=1.28)
  6. Lead time = 10 days
  7. Standard deviation of daily demand = 4 units
  8. Current on-hand inventory 220 units, with no open orders or back orders

  9. The store operates 52 weeks per year, 6 days per week. It has a continuous inventory review system.


    What is the annual cost saved by shifting from the 500-unit lot size to the EOQ?

Suppose that the discount appliance store uses a P system instead of a Q system. They order inventory every 12 days.

  1. What should T be?

  1. How much more safety stock (than with a Q system) is needed?

  1. It is time for the periodic review. How much should be ordered?

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ekkarill92 answered 1 year ago
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