Horizon Electronics Inventory Management — Product X
Horizon Electronics is a regional distributor supplying various electronic components to retail and service partners across the Midwest. One of their most critical products is a precision temperature sensor, referred to as Product X, which experiences stable and predictable demand throughout the year. Horizon’s central warehouse handles the inventory for this item.
The operations team has been directed to optimize inventory management for Product X due to increased carrying costs and occasional stockouts. The company currently uses a continuous review system and wishes to maintain sufficient buffer inventory to handle uncertainty during the lead time.
Annual demand (D): 24,000 units
Ordering cost (S): $150 per order
Holding cost (H): $3 per unit per year
Daily demand: 80 units
Lead time: 5 working days
Operating days per year: 300 days
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