Crew Soccer Shoes Company is considering a change of their current inventory control system for soccer shoes. The information regarding the shoes is:
Average demand-200 pairs per week
Lead time- 3 weeks
Order cost- $65 per order
Holding cost- $4 per pair per year
Desired service level- 95%
Standard deviation of weekly demand- 50
number of weeks per year- 52
The company decides to use a fixed order quantity system. What is the economic order quantity? What should be the reorder point to have a 95% service level? Explain how the system will operate.