Measuring Various Inventory Levels and Order Quantities


Consider the following data pertaining to a distribution center.

Mean Weekly Demand    100
Standard Deviation  of Weekly Demand    30
Lead Time    2 Weeks

# of weeks in year    50
Ordering cost:            $50 /order
Holding cost:              $4 /unit /week.
Cycle service level:        97%  

You have to measure order quantity, cycle inventory, safety inventory, reorder level, annual inventory holding cost, number of orders per year, annual ordering cost


The question belongs to Operations Management and it deals with measuring inventory levels, order quantities, etc. With measures such as mean weekly demand, standard deviation and lead time, various inventory levels have been calculated.

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