A regional distributor purchases discontinued appliances from various suppliers and then sells them on demand to retailers in the region. The distributor operates 5 days per week, 52 weeks per year. Only when it is open for busines can orders be received. The following data are estimated for the countertop mixer.
Average daily demand=100 Mixers Standard deviation of daily demand (oa) = 30 mixers Lead time (L) =3 days Holding cost-$9.40/unit/’year Ordering cost-$35/order Cycle-service level =92 percent The distributor uses a continuous review (0) system b. a. What order quantity Q, and reorder point, R, should be used? What is the total annual cost of the system? c. If on-hand inventory is 40 units, one open order for 440 mixers is pending, and no backorders exist, should a new order be placed?
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