I have this question on Inventory Stock and I need a solution to it. Guys, I need help. charls.
Mr Steve is a merchant which deals on soccer boot. The price of the soccer boot is $200 and the cost to manufacture it is $150. He wants to avoid stock out. He has the reorder point of 200 units assuming no safety stock. He wants to know how much safety stock he should have as buffer? The frequency of the demand during leadtime is shown below
DEMAND : FREQUENCY
200 : 2
250 : 2
300 : 1
350 : 3
400 : 4
The carrying cost per unit per year is estimated to be $2. What is safety stock level that can minimize the total inventory cost?