Question: An electronics retailer carries a particular cellular telephone with the following characteristics:

Average monthly sales = 120 units

Ordering cost = $25 per order

Carrying cost = 35% per year

Item cost = $300 per unit

Lead time = 4 days

Standard deviation of daily demand = .2 unit

Working days per year = 250

1. Determine the EOQ.
2. Calculate the reorder point for a 92% service level, assuming normally distributed demand.
3. Design a Q system for this item.
4. What happens to the reorder point when the lead time changes? What happens to the reorder point when the standard deviation of demand changes?

Price: $2.99

Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document