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The annual demand for a product is 15,600 units. The weekly demand is 300 units with a standard deviation of 90 units. The cost to
The annual demand for a product is 15,600 units. The weekly demand is 300 units with a standard deviation of 90 units. The cost to place an order is $32.00, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is $0.20 per unit. a. Find the reorder point necessary to provide a 98 percent service probability. (Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places.) Reorder point units b. Suppose the production manager is asked to reduce the safety stock of this item by 55 percent. If she does so, what will the new service probability be? (Use Excel's NORM.S.DIST() function to find the correct probability for your computed z value. Round "z" value to 2 decimal places and final answer to 1 decimal place.) Service probability units
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