Question
The new office supply discounter, Paper Clips, Etc. (PCE), sells a certain type of ergonomically correct office chair that costs $300. The annual holding cost
The new office supply discounter, Paper Clips, Etc. (PCE), sells a certain type of ergonomically correct office chair that costs $300. The annual holding cost rate is $120 per unit per year, annual demand is 900 units, and the ordering cost is $20 per order. The lead time is 4 days. Because demand is variable (standard deviation of daily demand is 2.4 units per day), PCE has decided to establish a customer service level of 91%. The store is open 300 days per year. a. What is the optimal order quantity?
b. What is the reorder point?
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Quality Inspired Management The Key to Sustainability
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