A company has determined that the EOQ for its only raw material is 2000 units every 30

Question:

A company has determined that the EOQ for its only raw material is 2000 units every 30 days. The company knows with certainty that a four-day lead time is required for ordering. The following is the probability distribution of estimated usage of the raw material for the month:

image

Stock-outs will cost the company ?10 per unit, and the average monthly holding cost is ?1 per unit:(a) Determine the optimal safety stock.(b) What is the probability of being out of stock?

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: