Find the optimal ordering policy for the shoe company

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Reference no: EM131351612

A local company sells many varieties of shoes. For one particular line, the company buys the shoes for $15.00 and sells them for $30.00. The cost of placing an order for the shoes is $50.00, and it takes a week before the shoes arrive. Annual demand for the shoes is approximately normally distributed with a mean of 5,200 pairs and a standard deviation of 520 pairs. The cost for holding shoes in inventory is $.12 per dollar value per year. If shoes are out of stock, the goodwill cost is estimated to be $5.00 per pair, and the sale is lost. Find the optimal ordering policy for the shoe company.

Reference no: EM131351612

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