Question: Inventory Control Problem

Daily demand for an office product at a hedge fund company is normally distributed with a mean of 50 units and standard deviation of 5 units. The source of supply is reliable and the FedEx Ground always takes five days to delivers the order after it is placed. The cost of placing the order is $10 and annual holding cost is $5 per unit. There are no stockout costs. Assume the office product is needed over the 252 trading days of the year. Find the optimal order quantity and reorder point to satisfy a 99.9% probability of not stocking out during the lead time.

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