Parameter Value

Selling Price per Suit €325

Markup Rate 30%
Cost Price per Suit €250
Annual Demand (D) 3,000 suits
Ordering Cost per Order (S) €2,200
Monthly Insurance Rate 0.5%
Annual Capital Cost Rate 14%
Annual Insurance Cost per Suit €15
Annual Capital Cost per Suit €35
Annual Holding Cost per Suit (H) €50
EOQ (Economic Order Quantity) Approx. 520 suits
 Calculation
Given in the case.
Given in the case.
Calculated as Selling Price / (1 + Markup Rate) = €325 / (1 + 0.30)
Assuming all suits ordered are sold: 1,500 suits/order * 2 orders/year.
Shipping cost for each container, given in the case.
Given in the case.
Given in the case.
Cost Price per Suit * Monthly Insurance Rate * 12 = €250 * 0.005 * 12
Cost Price per Suit * Annual Capital Cost Rate = €250 * 0.14
Sum of annual insurance cost and annual capital cost per suit: €15 + €35
Calculated using the EOQ formula: sqrt((2 * D * S) / H) = sqrt((2 * 3077 * 2200) / 50)
Retail Price € 325.00
Mark up 30%
Manufacture cost Retail Price € 325.00
Monthly insurace on inventory Mark up 30%
Standard deviation Manufacture cost € 250.00
Demand average percentage error Monthly insurace on invento 0.50%
Standard deviation 30 weekly
best-selling average percentage error Demand average percentage 40% MAPE(weekly)
slow-movers average percentage error
check best-selling average percenRetail Price ###
slow-movers average percen
Mark up 30%
1-What’s the optimal inventory policy fo check Manufacture cost ###
Monthly insurace on in 0.50%
1-What’s the optimalStandard deviation 30
Demand average percen 40%

D best-selling average pe 20%

S slow-movers average p 65%
H D check 2%
C S
EOQ H 1-What’s the optimal inventory po
Times C
EOQ
Times

D 3,120
S ###
R H ###
L C 250
R EOQ 957
L L Times 3.26
𝜎_𝑑
√𝐿∗𝜎_𝑑 L
𝜎_𝑑
MAD √𝐿∗𝜎_𝑑
average demand
𝐿∗𝜇_𝑑 MAD R reorder from Vie
average demand L lead time from V
p1 𝐿∗𝜇_𝑑
R1 L 16
Safety Stock p1 𝜎_𝑑 30
R1 √𝐿∗𝜎_𝑑 120
p2 Safety Stock
R2 MAD 24
Safety Stock p2 average demand 60
R2 𝐿∗𝜇_𝑑 960
p3 Safety Stock
R3 p1 50%
Safety Stock p3 R1 960
R3 Safety Stock -
p4 Safety Stock
R4 p2 60%
Safety Stock p4 R2 990
R4 Safety Stock 30
p5 Safety Stock
R5 p3 70%
Safety Stock p5 R3 1023
R5 Safety Stock 63
p6 Safety Stock
R6 p4 80%
Safety Stock p6 R4 1061
R6 Safety Stock 101
See Exhibit 1 for an example financial anaSafety Stock
p5
Note that this is a simplified analysis that leaves out ‘safety stock’ calcul 90%
See Exhibit 1 for an R5 1114
2-How does it compare to and what are iNote that this is a si Safety Stock 154
Current
€ 795,826 2-How does it compar
p6 95%
Current R6 1157
€ 795,826 Safety Stock 197
 See Exhibit 1 for an example fina
Note that this is a simplified analy
NEW-50%
€ 794,350 2-How does it compare to and wh
-€ 1,476 NEW-50% Current Annual Purchase
€ 794,350 € 795,826
-€ 1,476 Annual Ordering

Annual Holding C
NEW-60%
€ 794,806
NEW-60% NEW-50% Annual Purchase
€ 794,806 € 794,350
-€ 1,476 Annual Ordering

Average Holding
NEW-70%
€ 795,294
NEW-70% NEW-60% Annual Purchase
€ 795,294 € 794,806
Annual Ordering

Average Holding
NEW-80%
€ 795,865
NEW-80% NEW-70% Annual Purchase
€ 795,865 € 795,294
Annual Ordering

Average Holding
NEW-90%
€ 796,657
NEW-90% NEW-80% Annual Purchase
€ 796,657 € 795,865
 Annual Ordering

Average Holding
NEW-95%
€ 797,311
€ 1,485 NEW-95% NEW-90% Annual Purchase
€ 797,311 € 796,657
€ 1,485 Annual Ordering

Average Holding

NEW-95% Annual Purchase

€ 797,311
€ 1,485 Annual Ordering

Average Holding
MAPE(weekly)

weekly
MAPE(weekly)

MAPE(wee 80%
MAPE(wee 30% 40%

imal inventory policy for Kaffee Kostuum (how large should an order be, how often shou

units/year 478.3
per order/container 750
per unit/year
per unit
reorder from Vietnam
lead time from Vietnam

weeks 4 months
weekly

weekly
weekly
 an example financial analysis of the status quo policy.
a simplified analysis that leaves out ‘safety stock’ calculations (or, equivalently, targets a

ompare to and what are its advantages over the current practice?
Annual Purchase Cost = Annual Demand x Unit Purchasing Cost = D x C
###
Annual Ordering Cost = Number of orders x Ordering Cost = (D/Q) x S
###
Annual Holding Cost = Average Inventory x Holding Cost = (Q/2) x H
###

Annual Purchase Cost = Annual Demand x Unit Purchasing Cost = D x C

###
Annual Ordering Cost = Number of orders x Ordering Cost = (D/Q) x S
###
Average Holding Cost = Average Inventory x Holding Cost = (Q/2+SS) x H
###

Annual Purchase Cost = Annual Demand x Unit Purchasing Cost = D x C

###
Annual Ordering Cost = Number of orders x Ordering Cost = (D/Q) x S
###
Average Holding Cost = Average Inventory x Holding Cost = (Q/2+SS) x H
###

Annual Purchase Cost = Annual Demand x Unit Purchasing Cost = D x C

###
Annual Ordering Cost = Number of orders x Ordering Cost = (D/Q) x S
###
Average Holding Cost = Average Inventory x Holding Cost = (Q/2+SS) x H
###

Annual Purchase Cost = Annual Demand x Unit Purchasing Cost = D x C

###
Annual Ordering Cost = Number of orders x Ordering Cost = (D/Q) x S
###
Average Holding Cost = Average Inventory x Holding Cost = (Q/2+SS) x H
###

Annual Purchase Cost = Annual Demand x Unit Purchasing Cost = D x C

###
Annual Ordering Cost = Number of orders x Ordering Cost = (D/Q) x S
###
Average Holding Cost = Average Inventory x Holding Cost = (Q/2+SS) x H
###

Annual Purchase Cost = Annual Demand x Unit Purchasing Cost = D x C

###
Annual Ordering Cost = Number of orders x Ordering Cost = (D/Q) x S
###
Average Holding Cost = Average Inventory x Holding Cost = (Q/2+SS) x H
###
be, how often should it be placed)?
quivalently, targets a 50% service level). It is suggested that you also evaluate the costs
evaluate the costs of higher and more reasonable in-stock probability levels.
y levels.