Question: large electronics superstore sells a popular handheld computer. The store presently managesits inventory of this item with the following process: When the number of computers

large electronics superstore sells a popular handheld computer. The store presently managesits inventory of this item with the following process: When the number of computers in stockdrops to 20, it places an order for 35 to the manufacturer. (20 is called the
reorder pointand 35 is called theorder size.)The amount of time to receive an ordervaries a bit, but can beapproximated by a normal distribution with a mean of 5 days and a standard deviation of .3 days.An examination of sales records (at times when there are computers in stock) shows that the timebetween purchases of a computer is 2 hours on average (with an exponential distribution).Thestore is open 10 hours perday,7 days per week.The store estimates thatduring the next 2months this demand pattern should remain steady.
Management wants to satisfy at least 90%of the customer demand directly from thestoresinventory.Subject to this,of course, managementwants to minimize its costs.In this case,thecosts are $100 every time an order is placed (regardless of its size) and $.50 per day for every computer that is in inventory atthe stor aced (regardless of its size) and $.50 per day for everycomputer that is in inventory atthe store.Management wants to determine whether it shouldchange its reorder point and order size.
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