The Hardware Warehouse is evaluating the safety stock policy for all its items, as identified by the
Question:
The Hardware Warehouse is evaluating the safety stock policy for all its items, as identified by the SKU code. For SKU M4389, the company always orders 80 units each time an order is placed. The daily demand is constant, at 5 units per day; the lead time is normally distributed, with a mean of three days and a standard deviation of two days. Holding cost is $3 per unit per year. A 95% service level is to be maintained.
(a) What is the standard deviation of demand during the lead time?
(b) How much safety stock should be carried, and what should be the reorder point?
(c) What is the total annual holding cost?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Quantitative Analysis For Management
ISBN: 9781292217659
13th Global Edition
Authors: Barry Render, Ralph M. Stair, Michael Hanna, Trevor Hale
Question Posted: