Input Data
Mean daily demand, D = 5000
Standard deviation of daily demand, sD = 4000
Desired cycle service level, CSL = 0.99
Cost per phone, C = 100$
Holding cost, h = 20%
Outputs for Periodic Review Policy
Sea Transport Air Transport
Transport cost per unit = 0.50$ Transport cost per unit = 1.50$
Lead time, L = 36 Lead time, L = 4
Reorder interval, T = 20 Reorder interval, T = 1
Average batch size = 100000 Average batch size = 5000
Standard deviation of demand during L+T = 29,933 Standard deviation of demand during L+T = 8944
Required safety inventory = 69,635 Required safety inventory = 20,807
Desired order up to level = 349,635 Desired order up to level = 45,807
Days of safety inventory = 13.93 Days of safety inventory = 4.16
Average cycle inventory = 50,000 Average cycle inventory = 2,500
Cost of safety+cycle inventory per year = 2,392,703$ Cost of safety+cycle inventory per year = 466,150$
Transportation cost per year = 912,500$ Transportation cost per year = 2,737,500$
Annual holding + Transport cost = 3,305,203$ Annual holding + Transport cost = 3,203,650$
In transit inventory = 180,000 In transit inventory = 20,000
Cost of holding in transit inventory = 3,600,000$ Costof holding in transit inventory = 400,000$
Total cost including in transit inventory = 6,905,203$ Total cost including in transit inventory = 3,603,650$