Calculating EOQ and Reorder point
Inventory Management
(Reorder Point Calculation)
A distributor of large appliances needs to determine the
order quantities and
reorder points for the various products it
carries. The following data refer to a
specific refrigerator in its product line:
Cost to place an order- $100
Holding cost- 20 percent of product cost per year
Cost of refrigerator – $500 each
Annual demand- 500 refrigerators
Standard deviation during lead time – 10 refrigerators
Lead time- 7 days
Consider an even daily demand and a 365- year day
a) What is the economic order quantity?
b) If the distributor wants a 97 percent service
probability, what reorder
point, R, should be used?
(z=1.90 for 97%)
ScholarMatic: Explanation & Answer
Your ready answer from a verified tutor is just a click away for as little as $14.99
Click Order Now to get 100% Original Answer Customized to your instructions!
