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Floyd Distributors, Inc., provides a variety of auto parts to small local garages. Floyd purchases parts from manufacturers according to the EOQ model and then
Floyd Distributors, Inc., provides a variety of auto parts to small local garages. Floyd purchases parts from manufacturers according to the EOQ model and then ships the parts from a regional warehouse direct to its customers. For a particular type of muffler, Floyd's EOQ analysis recommends orders with Q. - 28 to satisfy an annual demand of 200 mufflers. Floyd's has 250 working days per year, and the lead time averages 16 days. Note: Use Appendix B to identify the areas for the standard normal distribution a. What is the reorder point if Floyd assumes a constant demand rate? If required, round your answer up to the nearest whole number. b. Suppose that an analysis of Floyd's mufflet demand shows that the lead-time demand follows a normal probability distribution with = 12 and 1.6. If Floyd's management can tolerate one stock-out per year, what is the revised reorder point? If required, round your answer up to the nearest whole number. X
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