Inventory management

A supplier for an electronics store has introduced quantity discounts to encourage larger order quantities of cameras. The price schedule is: Quantity purchased Price per unit fewer than 525 $80 at least 525 $75 Suppose the monthly demand at a retail store that buys from this retailer and resells is 175 units. The supplier charges a fixed cost of $180 per shipment. The cameras are expected to sell well for multiple seasons, so multiple replenishment opportunities are possible. If the holding cost is 4.0%, and the retailer implements periodic review to achieve 95% service level, how much should the retailer order if it has 500 units in stock? (Note: Use the z-table from the lecture notes, and choose the closest answer.) Multiple Choice 500 200 766 266 TABLE 14.1 The Distribution Function, F(z), and the Inventory Function, I(z), for the Standard Normal Distribution Function Z F(z) I(z) Z F(z) I(z) -4.0 .0000 0.0000 0.1 .5398 0.4509 -3.9 .0000 0.0000 0.2 .5793 0.5069 -3.8 .0001 0.0000 0.3 .6179 0.5668 -3.7 .0001 0.0000 0.4 .6554 0.6304 -3.6 .0002 0.0000 0.5 .6915 0.6978 -3.5 .0002 0.0001 0.6 .7257 0.7687 -3.4 .0003 0.0001 0.7 .7580 0.8429 -3.3 .0005 0.0001 0.8 .7881 0.9202 -3.2 .0007 0.0002 0.9 .8159 1.0004 -3.1 .0010 0.0003 1.0 .8413 1.0833 -3.0 .0013 0.0004 1.1 .8643 1.1686 -2.9 .0019 0.0005 1.2 .8849 1.2561 -2.8 .0026 0.0008 1.3 .9032 1.3455 -2.7 .0035 0.0011 1.4 .9192 1.4367 -2.6 .0047 0.0015 1.5 .9332 1.5293 -2.5 .0062 0.0020 1.6 .9452 1.6232 -2.4 .0082 0.0027 1.7 .9554 1.7183 -2.3 .0107 0.0037 1.8 .9641 1.8143 -2.2 .0139 0.0049 1.9 .9713 1.9111 -2.1 .0179 0.0065 2.0 .9772 2.0085 -2.0 .0228 0.0085 2.1 .9821 2.1065 -1.9 .0287 0.0111 2.2 .9861 2.2049 -1.8 .0359 0.0143 2.3 .9893 2.3037 -1.7 .0446 0.0183 2.4 .9918 2.4027 -1.6 .0548 0.0232 2.5 .9938 2.5020 -1.5 .0668 0.0293 2.6 .9953 2.6015 -1.4 .0808 0.0367 2.7 .9965 2.7011 -1.3 .0968 0.0455 2.8 .9974 2.8008 -1.2 1151 0.0561 2.9 .9981 2.9005 -1.1 .1357 0.0686 3.0 .9987 3.0004 -1.0 .1587 0.0833 3.1 .9990 3.1003 -0.9 .1841 0.1004 3.2 .9993 3.2002 -0.8 .2119 0.1202 3.3 .9995 3.3001 -0.7 .2420 0.1429 3.4 .9997 3.4001 -0.6 .2743 0.1687 3.5 .9998 3.5001 -0.5 .3085 0.1978 3.6 .9998 3.6000 -0.4 .3446 0.2304 3.7 .9999 3.7000 -0.3 .3821 0.2668 3.8 .9999 3.8000 -0.2 .4207 0.3069 3.9 1.0000 3.9000 -0.1 .4602 0.3509 4.0 1.0000 4.0000 0.0 .5000 0.3989