The demand for a product is normally distributed, but all of the other EOQ assumptions are met.

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The demand for a product is normally distributed, but all of the other EOQ assumptions are met. The annual demand is 10,000 units, and there are 250 working days per year. The ordering cost is $48 per order and the holding cost is $6 per unit per year. Sales during the 6-day lead time are normally distributed with a mean of 240 units and a standard deviation of 80 units. A service level of 90% has been established based on holding costs and stockout costs.

(a) How many units should be ordered to minimize cost?

(b) How much safety stock should be carried?

(c) What is the reorder point?


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Quantitative Analysis for Management

ISBN: 978-0132149112

11th Edition

Authors: Barry render, Ralph m. stair, Michael e. Hanna

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