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Leaky Pipe, a local retailer of plumbing supplies, faces demand for one of its SKUs at a constant rate of 3 0 , 0 0
Leaky Pipe, a local retailer of plumbing supplies, faces demand for one of its SKUs at a
constant rate of units per year. It costs Leaky Pipe $ to process an order to
replenish stock and $ per unit per year to carry the item in stock. Stock is received four
working days after an order is placed. No backordering is allowed. Assume working
days a year.
a What is Leaky Pipe's optimal order quantity?
b What is the optimal number of orders per year?
c What is the total cost of ordering the optimal order quantity?
d What is the reorder point?
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