Al Kitchens, Inc., installs kitchen cabinets, countertops, and floors. Al uses 30,000 tubes of caulk per year (assume 50 weeks per year) in the installation process. The order cost is $24 per order, and the holding cost is $0.25 per tube of caulk. The lead time for an order is 1 week, and the standard deviation of demand is 25 tubes per week.
a. What is Al's optimal order quantity?
b. What is the optimal number of orders per year?
c. What is the reorder point if Al desires a cycle-service level of 50 percent?
d. What value of z should be used if Al wishes to achieve a cycle-service level of 94 percent?
e. What should the reorder point be?