1. A sporting goods company has a distribution center that maintains inventory of fishing rods. The fishing rods have the following demand, lead time, and cost characteristics: Average demand 5 100 units per day, with a standard deviation of 12 units
Average lead time 5 12 days with a standard deviation of 2 days
250 days per year Unit cost 5 $25
Desired service level 5 95% Ordering cost 5 $50
Inventory carrying cost 5 20%
The basic question: How many fishing rods should the distribution center carry to provide the desired service level? There are, of course, many other specific questions, such as EOQ? Average cycle stock?