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Question 2 (4 points) Woods Sisters sells inexpensive doorbell systems. They have determined its ROP is 70. Holding cost per doorbell system per year

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Question 2 (4 points) Woods Sisters sells inexpensive doorbell systems. They have determined its ROP is 70. Holding cost per doorbell system per year is $10 and stockout cost is $15 per system. The optimum number of orders per year is 4. Based on historical experience, the probability distribution for inventory during the reorder period has been calculated as: # of Units Probability 50 .2 60 .2 70 .3 80 .2 90 .1 I What is the best reorder point for routers using safety stock logic? Your answer must include the total cost for each reorder point and you must state which reorder point you recommend. In other words, just stating the reorder point will not be sufficient.

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