Question: Walmart uses a continuous review system and operates 52 weeks per year. One of the SKUs has the following characteristics. Demand (D) = 20,600 units/year

Walmart uses a continuous review system and operates 52 weeks per year. One of the SKUs has the following characteristics.

  • Demand (D) = 20,600 units/year
  • Ordering cost (S) = $55.00/order
  • Holding cost (H) = $2.50/unit/year
  • Lead time (L) = 2 week(s)
  • Cycle-service level = 90%, z = 1.28
  • Demand is normally distributed, with a standard deviation of weekly demand of 103 units.
  • Current on-hand inventory is 1,040 units, with no scheduled receipts and no backorders.

What is the reorder point for this item if the company wants to provide a 90% cycle-service level?

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