A regional distributor purchases discontinued appliances from various suppliers and then sells them on demand to retailers in the region. The distributor operates 5 days per week, 52 weeks per year. Only when it is open for business can orders be received. The following data are estimated for a countertop mixer:

a. What order quantity, Q, and reorder point, R, should be used?
b. What is the total annual cost of the system?
c. If on-hand inventory is 40 units, one open order for 440 mixers is pending, and no backorders exist, should a new order be placed?

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Average daily demand (7) = 100 mixers Standard deviation of daily demand (d) = 30 mixers Lead time (Z) = 3 days Holding cost (H) = $9.40/unit/year Ordering cost (S) = $35/order Cycle-service level = 92 percent The distributor uses a continuous review system.