Question: A warehouse purchases a certain component and supplies it to retailers. The warehouse operates 5 days / week , 5 2 weeks in a year.

A warehouse purchases a certain component and supplies it to retailers. The warehouse operates 5 days/week,52 weeks in a year. Only when it is open that the the orders can be received. The desired service level is 95%. The following data are available- The average daily demand =100 units Standard deviation of daily demand =30 units Lead time =4 days Inventory carrying cost = Rs 11.375/unit/year Ordering Cost = Rs 35/order a. What Order Quantity and ROP should be used? b. If on-hand inventory is 40 units, there is an open order for 400 units and there is a Back-order for use of 30 units, should a new order be placed? If yes, for how much quantity?

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