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Q. A distributer of large appliances needs to determine the order quantities also reorder points for the various products it carries. The subsequent data refer to particular refrigerator in its product line:
Cost to place an order $120Holding cost 25% of product cost per yearCost of refrigerator $500 everyStandard deviation during lead-time 10 refrigeratorAnnual demand 500 refrigeratorLead-time 6 daysConsider an even daily demand also a 365-day year,
a) Elucidate what is the economic order quantity?
b) If the distributer needs a 98% service level, Elucidate what is the reorder point?
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