Each year, a computer store sells an average of 1,000 boxes of disks. Annual demand for boxes

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Each year, a computer store sells an average of 1,000 boxes of disks. Annual demand for boxes of disks is normally distributed with a standard deviation of 40.8 boxes. The store orders disks from a regional distributor. Each order is filled in two weeks. The cost of placing each order is $50, and the annual cost of holding one box of disks in inventory is

$10. The per-unit stockout cost (because of loss of goodwill and the cost of placing a special order) is assumed to be $20. The store is willing to assume that all demand is backlogged.

Determine the proper order quantity, reorder point, and safety stock level for the computer store. Assume that annual demand is normally distributed. What is the probability that a stockout occurs during the lead time?

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