Daily demand for a certain product is normally distributed with a mean of 100 and a standard deviation of 15. The supplier is reliable and maintains a constant lead time of 5 days. The cost of placing an order is $ 10 and the cost of holding inventory is $ 0.50 per unit per year. There is no stock out costs, and unfilled orders are filled as soon as the order arrives. Assume sales occur over 360 days of the year. Your goal here is to find the order quantity and reorder point to satisfy a 90 percent probability of not stocking out during the lead time.
a. What type of system is the company using?
b. Find the order quantity.
c. Find the reorder point.

  • CreatedApril 09, 2014
  • Files Included
Post your question