Order-Quantity Reorder-Point with Probabilistic Demand

Annual Demand 8,008

Ordering Cost $12.00
Annual Inventory Holding Rate % 20
Cost per Unit $6.00
Working Days per Year 250
Normal Distribution for Lead Time Demand
Mean 154
Standard Deviation 25
Probability of a Stockout 0.05

Optimal Inventory Policy

Economic Order Quanity 400.20

Reorder Point 195.12
Safety Stock 41.12
Annual Inventory Holding Cost $289.47
Annual Ordering Cost $240.12
Total Annual Cost $529.59
Maximum Inventory Level 441.32
Average Inventory Level 241.22
Number of Orders per Year 20.01
Cycle Time (Days) 12.49
Expected Stockouts per Year 1.00