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An automotive warehouse stocks a variety of parts that are sold at neighborhood stores. One particular part, a popular brand of oil filter, is purchased
An automotive warehouse stocks a variety of parts that are sold at neighborhood stores. One particular part, a popular brand of oil filter, is purchased by the warehouse for $ each. It is estimated that the cost of order processing and receipt is $ per order. The company uses an inventory carrying charge based on a percent annual interest rate. The monthly demand for the filter follows a normal distribution with mean and standard deviation Order lead time is assumed to be five months. Assume. that if a filteris demanded when the warehouse is out of stock, then the demand is backordered, and the cost assessed for each backordered demand is $ Determine the following quantities:
a What policy should Bobbi use if the stockout cost is replaced with a Type service objective of percent?
b What policy should Bobbi use if the stockout cost is replaced with a Type service objective of percent? You may assume an EOQ lot size.
c Find the reorder level that should be used in order to satisfy percent of customer demands for the part.
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