An animal health care distributor has three warehouses in the USA. The company w

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An animal health care distributor has three warehouses in the USA. The company would like to perform a study to evaluate the effects of inventory consolidation on customer service level. The study will consider penicillin that is used for companion animals. Based on the past data it is estimated that demand for the penicillin at each warehouse follows normal distribution with mean equal to 1200 doses per month and standard deviation for demand is 250 doses per month. It is assumed that inventory holding rate will be 25% per unit per year and cost of each dose of penicillin is $30. In addition, the company pays $100 whenever a branch places an order; the lead-time is 3 weeks. The objective customer service level is 99%. Considering the situation after consolidation A. Calculate the economic order quantity at the consolidated warehouse. Calculate safety stock, ss. Calculate the reorder point, ROP. Calculate the total cost of the consolidated warehouse. An office supply store buys printer paper and staples from a regional wholesaler. Printer paper costs $10 each ream and staples costs $2 each. The ordering cost is $30 for printer paper and $20 for staples per order with a common cost of $80. Holding costs are based on a 30% annual interest rate. The company sells an average of 15,000 paper reams and 35,000 staples annually. The standard deviation of demand for printer paper is 200 per week and for staples is 300 units per week Lead-time for order arrival is 4 weeks for both products and the company would like to achieve 97% customer service level for both products. Assuming that these items are jointly replenished. Calculate the optimal inventory replenishment interval. Calculate order-up-to levels. Calculate the total average annual cost.

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