Consider the following data.
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.
Based on the above 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%).
• 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%).
Support your responses with examples.
Needs to have in-text citations and complete reference list. The paper, in-text citations, and reference list needs to be in APA format. No plagiarism.
Assignment 2 Grading Criteria Maximum Points
Developed a table showing the safety stocks, and inventory costs associated with the safety stocks, for each product at each service level. 30
Developed a table showing the reorder points for each product at a 90% service level (assuming a two month lead time). 15
Used correct spelling, grammar, and professional vocabulary. Cited all sources using APA format. 5
Total: 50"
Support your responses with examples.
Needs to have in-text citations and complete reference list. The paper, in-text citations, and reference list needs to be in APA format. No plagiarism.
Assignment 2 Grading Criteria Maximum Points
Developed a table showing the safety stocks, and inventory costs associated with the safety stocks, for each product at each service level. 30
Developed a table showing the reorder points for each product at a 90% service level (assuming a two month lead time). 15
Used correct spelling, grammar, and professional vocabulary. Cited all sources using APA format. 5
Total: 50"
