For sku a3510 at the hardware warehouse the order quantity, Ask an Expert

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For SKU A3510 at the Hardware Warehouse, the order quantity has been set at 150 units each time an order is placed. The daily demand is normally distributed, with a mean of 12 units and a standard deviation of 4. It always takes exactly 5 days for an order of this item to arrive. Holding cost has been determined to be $10 per unit per year. Due to the large volume of this item sold, management wants to maintain a 99% service level.

(a) What is the standard deviation of demand during the lead time?

(b) How much safety stock should be carried, and what should be the reorder point?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91338753

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