Determine the optimal reorder point

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Reference no: EM13956800

Mobius Designs is a construction company that must carry inventory of cement to fulfill their projects. They expect their annual demand to be 10,000 tanks of cement. Assume that they operate 52 weeks a year. Each time they place an order it costs $35. Factoring in the cost of capital and storage, leads to a holding cost of $4 per unit per year. Once the manager places an order, he must wait 3 weeks before he receives his order. Suppose the standard deviation of weekly demand is 20. Using the fixed quantity inventory system strategy, determine the optimal reorder point if the firm wants a 75% service level.

Reference no: EM13956800

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