Osprey sports stocks everything that a musky fisherman could want in the Great North Woods. A particular musky lure has been very popular with local fisherman as well as those who buy lures on the internet from Osprey Sports. The cost to place orders with the supplier is $40/order; the demand averages 5 lures per day, with a standard deviation of 1 lure; and the inventory holding cost is $1.00/lure/year. The lead time from the supplier is 9 days, with a standard deviation of 3 days. It is important to maintain a 97% cycle-service level to properly balance service with inventory holding costs. Osprey Sports is open 350 days a year to allow the owners the opportunity to fish for muskies during the prime season. The owners want to use a continuous review inventory system for this item. a. What order quantity should be used? . What reorder point should be used? C. What is the total cost for this inventory system?

Osprey sports stocks everything that a musky fisherman could want in the Great North Woods. A particular musky lure has been very popular with local fisherman as well as those who buy lures on the internet from Osprey Sports. The cost to place orders with the supplier is $40/order; the demand averages 5 lures per day, with a standard deviation of 1 lure; and the inventory holding cost is $1.00/lure/year. The lead time from the supplier is 9 days, with a standard deviation of 3 days. It is important to maintain a 97% cycle-service level to properly balance service with inventory holding costs. Osprey Sports is open 350 days a year to allow the owners the opportunity to fish for muskies during the prime season. The owners want to use a continuous review inventory system for this item. a. What order quantity should be used? . What reorder point should be used? C. What is the total cost for this inventory system?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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Osprey Sports stocks everything that a musky fisherman couldwant in the Great North Woods. A particular musky lure hasbeen very popular with local fishermen as well as those whobuy lures on the Internet from Osprey Sports. The cost to placeorders with the supplier is $30/order; the demand averages4 lures per day, with a standard deviation of 1 lure; and the in-ventory holding cost is $1.00/lure/year. The lead time from thesupplier is 10 days, with a standard deviation of 3 days. It is im-portant to maintain a 97 percent cycle-service level to properlybalance service with inventory holding costs. Osprey Sports isopen 350 days a year to allow the owners the opportunity tofish for muskies during the prime season. The owners want touse a continuous review inventory system for this item.a. What order quantity should be used?b. What reorder point should be used?c. What is the total annual cost for this inventory system?
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