Question
Cindy's clothing store sells raincoats. The monthly demand for raincoats is normally distributed, with an average of 20 raincoats and a standard deviation of 5
Cindy's clothing store sells raincoats. The monthly demand for raincoats is normally distributed, with an average of 20 raincoats and a standard deviation of 5 rain coats. Cindy's supplier of raincoats charges a $90 processing fee per shipment of raincoats. After Cindy places an order to her supplier, it takes 3 weeks for the raincoats to arrive to the clothing store. Furthermore, Cindy must provide occasional maintenance to maintain the quality of the raincoats. Cindy pays an average of $12 in maintenance fees per raincoat per year
a)What is the optimal order quantity that Cindy should make to her supplier?
b) Assume Cindy currently sets her reorder point at 16 raincoats. What is the service level corresponding to this reorder point?
c) Assume Cindy wants to provide a 94% service level. What should Cindy set as her reorder point?
d) What is the safety stock corresponding to a 90% service level?
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