Question $5(6$ marks$)$

A regional distributor purchases discontinued appliances from various suppliers and then sells them on demand to retailers in the region. The distributor operates $5$ days p

Average daily demand $=100$ mixers

Standard deviation of daily demand $=30$ mixers

Lead time $=3$ days

Holding cost $=$ $ $0\mathrm{.}18/$unit$/$ week

Ordering cost $=$ $ $35/$order

Cycle service level $=92\%$

The distributor uses a continuous review Q system.

$$ What order quantity and reorder point should be used? $(2$ mark$)$

$$ What is the total annual cost of the system? $(2$ marks$)$

$$ If on$-$hand inventory is $40$ units, one open order for $440$ mixers is pending, and no backorders exist, should a new order be placed? $(2$ marks$)$