Question: Inventory Control

Daily demand for packages of five videotapes at a warehouse store is found to be normally distributed with mean of 100 units and standard deviation of 10 units. When the store orders tapes, the ordering cost is $40 and each order takes 7 days to arrive. Holding cost for inventory of each pack of tapes is $10 per year. Assume the store is open 360 days a year.

(Note: You must list in details the formulas and steps in solving the problems.)

1. Based on the EOQ, calculate the optimal ordering quantity.
2. If the store wants the probability of stocking out to be no more than \(1 \%\) (99% service level), and daily demands are independent of each other, what reorder point should be set?

Price: $2.99

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