Assume the following information about a given inventory ite…
Assume the following information about a given inventory item. Annual demand = 8,400 Holding cost = $5 / unit / year Working days per year = 280 days Order cost = $120 Average daily demand = 30 units Average lead time = 8 days Standard deviation of daily demand = 4 units Standard deviation of lead time = 2 days Also assume that decisions have already been made to have a safety stock of 20 and an order quantity of 1200. How much is the extra recurring cost annually to keep you from running out of stock during half your lead times?