The new office supply discounter paper clips etc pce sells, Ask an Expert

Management Studies

The new office supply discounter, Paper Clips, Etc. (PCE), sells a certain type of ergonomically correct office chair that costs $400. The annual holding cost rate is 40% of the item cost, annual demand is 1200 units, and the ordering cost is $25 per order. The lead time is 8 days. Because demand is variable (standard deviation of daily demand is 2.4 chairs), PCE has decided to establish a customer service level of 90% (Z=1.28). The store is open 300 days per year.

a) What is the optimal order quantity?

b) What is the safety stock?

c) What is the reorder point?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91627424

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