Answer Happy

Based on statistical analysis for demand, the distribution of data for a particular product seems to be normal. The data shows a daily average of 25 units with a standard deviation of 5 units. Since this a product that is purchased, you should wait 5 days for delivery as soon as you place an order. The cost per unit of this product is $5. The supplier lead time has a standard deviation of 1 day. Every time you place an order to the supplier charge is $25, and the inventory holding cost is $8.00 per unit per year. The company operates 365 days per year. a. What is the economic order quantity? b. What is the safety stock at a service level of 90%? c. What is the optimal reorder point assuming a service level of 90%?