The bookstore sells travelers notebooks. Annual demand for these notebooks follows a Normal distribution with an average of 3123 units and a standard deviation of 750. The bookstore buys these notebooks from its manufacturer for $ 3 per notebook and sells them for $ 5. There is an order waiting period of 5 weeks, which elapses from when an order is placed to the manufacturer until it is delivered to the bookstore. The accounting department estimated that the process of placing an order costs $ 2 and recommends that a 22 percent annual interest be applied  to the material for "holding cost" reasons. The cost of not complying with the demand is estimated at 40 cents per unit. , in addition to the 'profit loss', both then represent the cost of 'loss of good-faith' or 'loss-of-goodwill' (Conversion: 7 days a week, 52 weeks in a year.) Under this scenario, answer the following:
Assume that you want to minimize costs.
a. Determine the optimal order size (one significant decimal place):
b. Determine the reorder point (one significant decimal place):
c. Determine the average annual cost of this policy (two significant decimal places):

 Assume that you want to maintain customer service, where material shortage periods are limited.
d. Determine the optimal order size
e. Determine the reorder point

Answer rating: 100% (QA)

a Optimal order quantity Q 2DSH where Q optimal order quantity D annual demand S standard deviation ... View the full answer