An Auto Parts Store (Open 350 Days Per Year) in a Major

question 42

Essay

An auto parts store (open 350 days per year) in a major metropolitan area reviews its inventory on a periodic basis using a computer system.It has recently been experiencing some problems with a particular part, a tune?up kit.The kit is bought from a U.S.manufacturer.The annual demand for these kits is 10,500.The cost to carry one kit in inventory for one year is $4.90, and the cost to place a replenishment order is $17 per order.Replenishment lead time is 4 days.
a.What should be the review period for these tune-up kits?
b.What is the optimal replenishment level without safety stock?
c.What is the optimal replenishment level with safety stock, assuming a 95 percent service level?

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Definitions:

Tobacco Companies

Businesses involved in the manufacture, marketing, and distribution of tobacco products, such as cigarettes, cigars, and snuff.

Globalization

The process of interaction and integration among people, companies, and governments worldwide, often driven by international trade and investment and aided by information technology.

Technological Factors

These are elements that relate to the innovation, inventions, and technological capabilities that impact an organization, industry, or economy.

Interest Payments

Monetary amounts paid at regular intervals by the borrower to a lender as compensation for the use of borrowed money, often a percentage of the outstanding loan.