Daily demand for a certain product is nomally distributed with a mean of 60 and standard deviation

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Daily demand for a certain product is nomally distributed with a mean of 60 and standard deviation of 7. The source of supply is reliable and maintains a constant lead time of six days. The cost of placing the order is $10 and annual holding costs are $0.50 per unit. There are no stockout costs, and unfilled orders are filled as soon as the order arrives. Assume sales occur over the entire 365 days of the year. Find the order quantity and reorder point to satisfy a95 percent probability of not stocking out during the lead time.

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Operations Management For Competitive Advantage

ISBN: 1572

11th Edition

Authors: Richard B. Chase, F. Robert Jacobs

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