# Tax Preparers, Inc. works 280 days per year. The company uses adding machine tape at a rate

## Question:

Tax Preparers, Inc. works 280 days per year. The company uses adding machine tape at a rate of six rolls per day. Usage is believed to be normally distributed with a standard deviation of three rolls during lead time. The cost of ordering the tape is $15, and holding costs are $0.25 per roll per year. Lead time is two days.

a) Calculate the economic order quantity.

b) What reorder point will provide an order-cycle service level of 97 percent?

c) How much safety stock must the company hold to have a 97 percent order-cycle service level?

d) What reorder point is needed to provide an order-cycle service level of 99 percent?

e) How much safety stock must the company hold to have a 99 percent order-cycle service level?

## Step by Step Answer:

**Related Book For**

## Operations Management An Integrated Approach

**ISBN:** 9781119497387

7th Edition

**Authors:** R. Dan Reid, Nada R. Sanders