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Classic Cars has created an improved automotive parts and tire offering to support its new and used BMW auto sales. The head of this new
Classic Cars has created an improved automotive parts and tire offering to support its new and used BMW auto sales. The head of this new department Jenny Jackson wants to ensure that the reorder quantities for the various parts and tires have been correctly established. Jenny has decided to test one item to support her assumptions and will consider the Michelin tires, Defender size times BSA. A perpetual inventory system has been used in the past and Jenny has created the following list of data:
Cost per tire $ each
Holding cost percent of tire cost per year
Demand per year
Ordering cost $ per order
Standard deviation of daily demand tires
Delivery lead time days
Because customers generally do not wait for tires but go elsewhere, Jenny has decided to use a service probability of percent. Jenny is assuming the demand occurs days per year.
a Determine the order quantity. Round your answer to the nearest whole number.
Order quantity
tires
b Determine the reorder point. Use Excel's NORMSINV function to find the correct critical value for the given alpha level. Do not round intermediate calculations. Round z value to decimal places and final answer to the nearest whole number.
Reorder point
tires
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