Elucidate what is the economic order quantity

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Reference no: EM1373339

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 $120
Holding cost 25% of product cost per year
Cost of refrigerator $500 every
Standard deviation during lead-time 10 refrigerator
Annual demand 500 refrigerator
Lead-time 6 days
Consider 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?


Reference no: EM1373339

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