FQ3. Annual demand is 12500 units, cost per order is $60 and carrying cost per unit...

FQ3. Annual demand is 12500 units, cost per order is $60 and carrying cost per unit as a percentage is 8%. The company works 50 weeks a year; the lead-time on all orders placed is 5 weeks.

Assuming constant lead-time demand, and a unit cost of $40 what is the economic order quantity? What is the reorder point.
If lead-time demand shows variability that follows a normal distribution with a mean μ =280 and a standard deviation σ =20, what will the revised reorder point if two stock-outs (shortages) are allowed?
What is the company’s reorder point if the probability of a stock-out on any cycle is restricted to 0.05?

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keosha answered 1 year ago

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