[See Steps] Robert's Drugs is a drug wholesaler supplying 55 independent drug stores. Roberts wishes to determine an optimal inventory policy for Comfort brand
Question: Robert's Drugs is a drug wholesaler supplying 55 independent drug stores. Roberts wishes to determine an optimal inventory policy for Comfort brand headache remedy. Sales of Comfort are relatively constant as the past 10 weeks of data indicate.
Week Sales (cases) Week Sales (cases)
1 110 6 120
2 115 7 130
3 125 8 115
4 120 9 110
5 125 10 130
Each case of Comfort costs Roberts $10 and Roberts uses a 14% annual holding cost rate for its inventory. The cost to prepare a purchase order for Comfort is $12. What is Roberts’ optimal order quantity?
The lead time for a delivery of Comfort has averaged four working days. Lead time has therefore been estimated as having a normal distribution with a mean of 80 cases and a standard deviation of 10 cases. Roberts wants at most a 2% probability of selling out of Comfort during this lead time. What reorder point should Roberts use?
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