Crew Soccer Shoes Company is considering a change of their current inventory control system for soccer shoes. The information regarding the shoes is given below. The company decides to use a fixed order quantity system. [15 points] Average demand = 250 pairs/week Lead time = 3 weeks Order cost = $75/order Unit cost = $21.50 Carrying charge rate = 0.20 Desired service level = 95% Standard deviation of weekly demand = 40 Number of weeks per year = 52
a. What is the economic order quantity?
b. What should be the reorder point be to have a 95% service level?