The new office supply discounter,Paper Clips,Etc.(PCE),sells a certain type of ergonomically correct office chair that costs $300.The annual holding cost rate is 40% of the item cost,annual demand is 900 units,and the ordering cost is $20 per order.The lead time is 4 days.Because demand is variable (standard deviation of daily demand is 2.4 chairs),PCE has decided to establish a customer service level of 90%.The store is open 300 days per year.
(a)What is the optimal order quantity?
(b)What is the safety stock?
(c)What is the reorder point?

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The Answer of The new office supply discounter,Paper Clips,Etc.(PCE),sells a certain type of ergonomically correct office chair that costs $300.The annual holding cost rate is 40% of the item cost,annual demand is 900 units,and the ordering cost is $20 per order.The lead time is 4 days.Because demand is variable (standard deviation of daily demand is 2.4 chairs),PCE has decided to establish a customer service level of 90%.The store is open 300 days per year.
(a)What is the optimal order quantity?
(b)What is the safety stock?
(c)What is the reorder point?

The New Office Supply Discounter,Paper Clips,Etc