A product has a reorder point of 260 units,and is ordered ten times a year on average.The following table shows the historical distribution of demand values observed during lead time.
Currently,stockouts are valued at $5 per unit per occurrence,while inventory carrying costs are $2 per unit per year.Should the firm add safety stock? If so,how much safety stock should be added?

Question

A product has a reorder point of 260 units,and is ordered ten times a year on average.The following table shows the historical distribution of demand values observed during lead time.
  Currently,stockouts are valued at $5 per unit per occurrence,while inventory carrying costs are $2 per unit per year.Should the firm add safety stock? If so,how much safety stock should be added?

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The Answer of A product has a reorder point of 260 units,and is ordered ten times a year on average.The following table shows the historical distribution of demand values observed during lead time.
  Currently,stockouts are valued at $5 per unit per occurrence,while inventory carrying costs are $2 per unit per year.Should the firm add safety stock? If so,how much safety stock should be added?

A Product Has a Reorder Point of 260 Units,and Is