Homework #3 Operations Management - Inventory Problem 1 1. A distributor of large appliances needs to determine the order quantities and reorder points for the various products it carries. The following data refer to a specific refrigerator in its product line: Cost to place an order $100 Holding cost 20 percent of product cost per year Cost of refrigerator $500 each Annual demand 500 refrigerators Standard deviation of demand during lead time 10 refrigerators Lead time 7 days Consider an even daily demand and a 365-day year. a. How many refrigerators should be ordered? (Hint: EOQ) b. What is the optimal reorder point? c. What is the cost of the proposed inventory model? d. What kind of inventory model is used in this example