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The annual demand for a product is 16,000 units. The weekly demand is 308 units with a standard deviation of 80 units. The cost to place an order is $30.50, and the time from ordering to receipt is six weeks. The annual inventory carrying cost is $0.10 per unit.

a. Find the reorder point necessary to provide a 95 percent service probability. (Round your answer to the nearest whole number.)

b. Suppose the production manager is asked to reduce the safety stock of this item by 50 percent. If she does so, what will the new service probability be? (Round your answer to 3 decimal places.)

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M9349559

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