Q62
Annual demand for a product is 13,000 units; weekly demand is250 units with a standard deviation of 40 units. The cost ofplacing an order is $100, and the time from ordering to receipt isfour weeks. The annual inventory carrying cost is $0.65 per unit.To provide a 98 percent service probability, what must the reorderpoint be? Suppose the production manager is told to reduce thesafety stock of this item by 100units. If this is done, what willthe new service probability be? [2 Marks]
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