(Answered) Q1 monthly demand for an inventory item is a normally

Management Studies

Q1: Monthly demand for an inventory item is a normally distributed random variable with a mean of 30 units and a standard deviation of 2. Demand follows this distribution every month, 12 months a year. When inventory reaches a predetermined level, an order for replenishment is placed. The fixed ordering cost is $60 per order. The items cost $4 per unit, and the annual inventory holding cost is 25 percent of the average value of the inventory. The replenishment lead time is exactly 4 months.

Determine the necessary EOQ and reorder point to achieve a 90 percent service level.

a. 170; 85

b. 208; 126

c. 170; 84

d. 208; 85

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