Arduino is one of the largest selling items in adafruit, Ask an Expert

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Arduino is one of the largest selling items in Adafruit, which deals in circuit boards. The circuit board sells for $150 per unit and costs $100 to purchase. Based on the previous sales data, the average monthly demand is 1,000 boards with a standard deviation of 200 boards and it appears to follow a normal distribution. Adafruit uses 10% annual interest rate to estimate inventory holding costs and the fixed cost per replenishment is $200. Assume that the replenishment lead time is a month, unfulfilled demands are backordered, and backorder cost is $10/unit/year. Compute the optimal replenishment quantity and reorder point.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93114231

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