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Retailers Warehouse ( RW ) is an independent supplier of household items to department stores. RW attempts to stock enough items for a 9 0
Retailers Warehouse RW is an independent supplier of household items to department stores. RW attempts to stock enough items for a percent service probability.
A stainlesssteel knife set is one item it stocks. Demand sets per year is relatively stable over the entire year. Whenever new stock is ordered, a buyer must ensure that numbers are correct for stock onhand and then phone in a new order. The total cost involved to place an order is about $ RW figures that holding inventory in stock and paying for interest on borrowed capital, insurance, and so on add up to about $ holding cost per unit per year.
Analysis of the past data shows that the standard deviation of demand from retailers is about four units per day for a day year. Lead time to get the order is seven days.
a What is the economic order quantity? Round your answer to the nearest whole number.
b What is 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.
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