Fryrsquos electronics a large electronics retailer, Ask an Expert

Management Studies

Fry’s electronics, a large electronics retailer, purchases 1TB hard disks and sells them to customers. The store operates on a continuous review inventory system.

- Weekly demand for disk drives is independent and normally distributed with a mean of 50 and a standard deviation of 15.

- Lead time is 2 weeks

- Holding cost for a disk drive is $1/unit/week

- Ordering costs are $400.00/order

- Desired fill rate is 98.0%

a. What order quantity and reorder point, (Q, R), should the distribution center use?

b. What order quantity and reorder point, (Q, R), should the distribution center use if, instead of a fill rate of 98%, a penalty cost of p = $10/unit is used instead?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93115021

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