Question: David Rivera Optical has determined that its reorder point for eyeglass frames is 50 (d x L) units. Its carrying cost per frame per

David Rivera Optical has determined that its reorder point for eyeglass frames

David Rivera Optical has determined that its reorder point for eyeglass frames is 50 (d x L) units. Its carrying cost per frame per year is $5, and stockout (or lost sale) cost is $40 per frame. The store has experienced the following probability distribution for inventory demand during the lead time (reorder period). The optimum number of orders per year is six. Number of Units 30 40 50 60 70 ROP-> Probability .2 2 .3 2 .1 1.0 How much safety stock should David Rivera keep on hand?

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