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A sports clothing store keeps two variants of a cap. Both variants are classified as A category items in the store's inventory. The first variant
A sports clothing store keeps two variants of a cap. Both variants are classified as A category items in the store's inventory. The first variant has a normally distributed monthly demand of 500 units with a standard deviation of 12. The second variant is customized with the logo of the local baseball team. Each time the team plays a tournament, the store is able to sell approximately 900 units of this customized cap. This demand is also approximately normally distributed with a standard deviation of 50 units. After the tournament, the store is able to sell all the unsold units of the customized caps at 50% of the regular selling price. Both variants cost $10 a unit and sell at a regular price of $14 per unit. The cost of capital for the store is 8% per year. The shipment against a replenishment order is received after 10 days ( 0.33 month) of placing the order with the supplier. Each shipment from the supplier costs $20 in delivery charges and half an hour of staff's time for storage. Staff is paid $16 an hour. a) What is the optimum order quantity (EOQ) and the reorder point for the first variant
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