WIP= $1,152,000; RM = $2,725,000; FG = $ 3,225,000; Total = $ 7,120,000
Sales = $ 24,000,000
- a) Weeks of Supply = (7,120/24,000) * 52 = 15.4
- b) Inventory turns = 24,000/7,120) = 3.4 times per year
C = $ 11.7/unit
D = 90 pairs/ week
S = $54 /order
h = 27% /year or H = .27 * 11.7 = $3.159/unit/year
Service level = 80%
L = 3 weeks
Sigma = 15 pairs/week
I = 320 pairs
time between orders= Q/D = 400/90 = 4.4 weeks
L= 3 weeks
D*L = 450
Sigma = 15
ROP = 489
ROP = D * L + z *sigma * sqrt(L)
489 = 450 + z * 15 * sqrt (3)
solving for z we find z= 1.5
When z= 1.3 Cycle service level is 93.32% (from the standard normal table)
