At the just do it sports store a popular sports t-shirt has a normally distributed demand with a mean of 2592 units per year and a standard deviation of 81 units. The t-shirt is sourced by the store for Rs. 360 and its annual holding cost is computed as 10% of the unit value. The annual cost of backordering is Rs. 64 per unit while the order cost is Rs. 225 for each order. The store works 324 days a year and the lead time is 4 days.

What's the optimal order quantity?

Find the optimal service level and the reorder point.

What is the reader point for a 95% service level? Compare the safety stock at this level with that at the optimal stockout level?

Answer rating: 100% (QA)

To find the optimal order quantity we can use the Economic Order Quantity EOQ formula EOQ sqrt2 annual demand order costholding cost per unit Where An... View the full answer