Topic > Business Case Study: Steve's Tire And Lube ' - 1112

For other parts and supplies, the maximum safety stock level is 80.85, which is high performance motor oil. For other products, they are not as high as motor oil and their safety stock level is between 1.82 and 17.99. The stock level arrangement is adequate as the lead time for the protective cover is one week while the sale and demand of the covers are high. So it is reasonable to have a high inventory level. Since the service level is very high (95%), we recommend that the safety level for the seat cover can be higher. We can find that by using the continuous review system the total annual cost for ordering and maintaining inventory is $6646.57. Furthermore, we find that the carrying cost is 30% of the unit cost, and the carrying cost for each order is $40. To minimize the total inventory cost, Steve's Tire must increase the quantity of high-demand products and decrease the level of safety at low demand. By following the above recommendations, Steve's Tire can avoid additional order costs and inventory waste