Business Decision Modeling Analysis

Bus Decision Modeling Analysis Floyd Distributors, Inc., provides a variety of auto parts to small local garages. Floyd purchases parts from manufacturers according to the EOQ model and then ships the parts from a regional warehouse direct to its customers. For a particular type of muffler, Floyd's EOQ analysis recommends orders with Q=50 mufflers to satisfy an annual demand of 2000 mufflers. Floyd's has 250 working days per year, and the lead time averages 10 days. a. What is the reorder point if Floyd assumes a constant demand rate? b. Suppose that an analysis of Floyd's muffler demand shows that the lead-time demand follows a normal probability distribution with =3.5. If Floyd's management can tolerate 2 stock-outs per year, what is the revised reorder point? c. What is the safety stock for part (b)? If Ch=$15 /unityear, what is the extra cost due to the uncertainty of demand? Please save your answers in an Excel file and upload it into this Dropbox