A product with an annual demand of 1000 units has Co = $25.5 and Ch = $8. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with µ = 25 and σ = 5.
What is the recommended order quantity? If required, round your answer to two decimal places.
Q* =
What are the reorder point and safety stock if the firm desires at most a 2% probability of stock-out on any given order cycle? If required, round your answers to the nearest whole number.
Reorder point =
Safety stock =
If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? If required, round your answer to four decimal places.
P(Stockout/cycle) =
How many times would you expect a stock-out during the year if this reorder point were used?
Number of Orders =