Question: A firm has lead time demand distribution which is given below. It has estimated carrying cost 20% p.a. of price, which is Rs. 100. Shortage

A firm has lead time demand distribution which is given below. It has estimated carrying cost 20% p.a. of price, which is Rs. 100. Shortage cost is also estimated that is Rs. 25 per unit per period of time.

Lead time demand	20	30	40	50	60
Probability	0.20	0.25	0.15	.30	.10

Determine the optimum reorder level.

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