Question
A distributor of large appliances needs to determine the order quantities and reorder points for the various products it carries. The following data refer to
A distributor of large appliances needs to determine the order quantities and reorder points for the various products it carries. The following data refer to a specific refrigerator in its product line: Cost to place an order $ 50 /order Holding cost 25 percent of product cost per year Cost of refrigerator $ 540 /unit Annual demand 760 units Standard deviation of demand during lead time 36 units Lead time 7 days Consider an even daily demand and a 365-day year. a. What is the economic order quantity? (Round your answer to the nearest whole number.) b. If the distributor wants a 95 percent service probability, what reorder point, R, should be used? (Use Excel's NORMSINV() function to find the correct critical value for the given -level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)
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