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Annual demand for a certain product is 1200. The standard deviation in daily demand is 20. The supplier for the part has a lead time
Annual demand for a certain product is 1200. The standard deviation in daily demand is 20. The supplier for the part has a lead time of 9 days. The cost of placing an order is $20, and annual holding costs are $1 per unit. The Fixed-Quantity Order model is being used. The Service Level targeted is 90%. (show all your work)
e. What is the optimal order quantity using a safety stock approach?
f. What is the reorder point using a safety stock approach?
g. What is the percent-chance of stock-outs when this optimal policy is followed?
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