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The Wonderful Hair Salon Buys Lots of Shampoos

Question 36

Multiple Choice

The Wonderful Hair Salon buys lots of shampoos. Wonderful follows the exponential-smoothing forecasting method, and based on their forecast calculations, annual demand is 750 units. Wonderful normally pays $3.00 per shampoo bottle when ordering from its supplier. Each order that is placed with the supplier costs $18 to process. Wonderful's holding cost for shampoos is 15% of the cost of the shampoo bottle per year.
-Now suppose the supplier of workbenches guarantees KraftyCity that the lead time will be a constant 3 weeks, with no variability (i.e., standard deviation of lead time = 0) . Using the average weekly demand as 24, with a standard deviation of 8 workbenches and a service level of 95%, calculate the reorder point.


A) 95
B) 99
C) 102
D) 105
E) Do not have enough information to answer the question

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