What is a good reorder point

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Reference no: EM1387538

You are a major tire retailer in an urban area, and the demand for your most popular tire historically follows a Normal distribution with a mean of 240 per day, with a standard deviation of 28, and a net profit of $7 per tire. Replenishment by the manufacturer's DC has a lead-time with a Normal distribution mean of 12 days and a standard deviation of 1.3 days. Ordering and holding costs are low, and you just lump them all into your overhead costs. What is a good reorder point? What is a good safety stock, if any? A customer who is not satisfied at your store does not wait and simply drives down the street to a competitor.

Reference no: EM1387538

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