Question: Based on the following historical data, determine the optimal order quantity, safety stock, and reorder point for a perpetual system cost of placing an order

Based on the following historical data, determine the optimal order quantity, safety stock, and reorder point for a perpetual system

cost of placing an order = $29

annual carrying charge = 17%

warehouse capacity = 1000 units

value of an item = $400

annual demand for the item = 2475 units

number of operating days in a year = 360

stockout cost per unit = $29

average lead time = 8 days

standard deviation of lead time = 4 days

standard deviation of daily demand = 3 units

distribution of demand during lead time = normal

Briefly explain how this system would work in a company

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