Question: The demand for a product is normally distributed with an average of 15000units/year. the standard deviation of daily demand is 15 units. the lead time

The demand for a product is normally distributed with an average of 15000units/year. the standard deviation of daily demand is 15 units. the lead time 12 days . the ordering cost 60 dollar/order and the holding cost is 20 dollar /unit year. the company operates 250 days in a year and the management wants a 98% cycle service level. the company uses the periodic review system to control the inventory. now its time to give an order. the on hand inventory is 500 units and there are no scheduled receipts or backorders. what should be the approximate target inventory level in order to minimize the total cost ?

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Answer Solution i Z value of service level of 98 NORMSINV 098 20537 Lead time 12 days ... View full answer

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