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Greg’s Pharmacy uses a periodic review inventory system. Every Friday, the pharmacist reviews her inventory and determines the size of the replenishment order. For example, she knows that demand for 500-mg metformin tablets, a drug for diabetics, is normally distributed with a mean of 6,000 tablets each week with a standard deviation of 500 tablets per week. Lead time is three weeks. The desired cycle-service level is 95 percent (z = 1.645). There are currently no outstanding orders.
A) Determine the order quantity (Q).
B) How many tablets should be ordered if the current inventory of metformin is 19,000 tablets?
Complete worksheet and determine net profit per unit to Reska Ltd for each possible future spot rate. Determine the breakeven point(s) of the long straddle. What are breakeven points of a short straddle using these options?
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