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6.5 Reorder Level - Planned Shortages Allowed When planned shortages, or backlogging, is allowed we can use the EOQ model with planned shortages (discussed in Chap. 3) to compute the order size. The formula to compute the order size when planned shortages are allowed is as follows: 2DC (C) +C) Ch, We will continue to use Eq. 6.4 (or Eq. 6.5) to determine the order level when the demand is variable. h41 Solved Problem 6.12 Steren sells just one type of electric adaptors that are used in households and offices. Demand for adaptors is normally distributed with a mean of 500 units per month and a standard deviation of 20 units per month. The inventory carrying cost, Chris $0.5 per piece per month, and ordering cost per order, C., is $350 per order. If backlogging is allowed and the shortage cost is $5 per adaptor per month, compute the EOQ and the reorder level for an 85% probability of not stocking out during the lead time. The lead time is 1 month