Question: Suppose a distributor faces an annual demand for a car horn for small cars that is normally distributed with a mean of 2300 items and

Suppose a distributor faces an annual demand for a car horn for small cars that is normally distributed with a mean of 2300 items and a standard deviation of 300.

The cost of placing an order is $150 and the holding cost is $10/item/year. The replenishment lead time is 9 days (assume 352 days in a year). Answer the following:

a. Compute the economic order quantity (EOQ).

b. If a service level of 5% is desired, what should R be in the (Q, R)

model?

c. For your answer to part (b), what is the average cycle, safety, and pipeline stock equal to?

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a Economic Order Quantity EOQ EOQ 2DS H EOQ 2 2300 150 10 26267 263 units b Reord... View full answer

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