An item is used in an assembly operation at an average rate…
An item is used in an assembly operation at an average rate of 16 per day and a standard deviation of 20 per week (7 days per week, 50 weeks per year). Assume normally distributed (bell curve) usage. This item is procured from an outside vendor at a cost of $12.50 each. The lead time is 2 days. The unit holding cost is $2.50 per year, and the fixed order cost is $50 per order. The inventory level is reviewed every Monday, and an order placed accordingly each Monday. Calculate the Target Inventory Level required for a service level of 75%. PLEASE SHOW YOUR WORK. STATE ANY EXCEL FORMULAS USED.