Question
A cell phone manufacturer is preparing its inventory and production schedule. A key element is installing a SIM card into each phone. Demand has been
A cell phone manufacturer is preparing its inventory and production schedule. A key element is installing a SIM card into each phone. Demand has been averaging 238 cards per week. Holding costs are $0.03 per card per week, and reorder costs are estimated at $12 per order.
The manufacturer does not want to be out of stock on more than 1% of their orders. There is a one-day delivery time. The standard deviation of demand is six cards per day. Assume a normal distribution of demand during lead time and a seven-day work week. What is the average amount of safety stock for the reorder point?
A) 10
B) 12
C) 14
D) 16
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started