Suppose the production manager is asked to reduce

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The annual demand for a product is 14,200 units. The weekly demand is 273 units with a standard deviation of 95 units. The cost to place an order is $32.00, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is $0.10 per unit.

a. Find the reorder point necessary to provide a 95 percent service probability. (Round your answer to the nearest whole number.)

b. Suppose the production manager is asked to reduce the safety stock of this item by 45 percent. If she does so, what will the new service probability be? (Round your answer to 3 decimal places.)

Reference no: EM1381481

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