Chapter 12
Time between orders (TBO) = Q/D = 894/20,000 = 0.0447 years = 2.32 weeks. Weekly demand = 20,000/52 = 385 units. For a 95% cycle-service level, z = 1.65. Safety stock: = (1.65)(100) = 233.34, or 233 units. Now solve for R, as. R = L + Safety stock = 385(2) + 233 = 1,003 units. i. Annual holding cost of cycle inventory. Annual ordering cost ................
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