Annual demand cant be supplied out of inventory

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Reference no: EM131794239

The Kharn Corporation orders 5 units of an item every day. Daily demand of this item averages 5 units and is distributed as follows: Demand 1 2 4 5 6 7 9 Probability: 0.01 0.04 0.1 0.2 0.3 0.2 0.1 0.04 0.01

a) If management sets the reorder point at 7 units, what is the service level?

b) Assuming 200 workdays (annual demand -1000), how many units of annual demand cant be supplied out of inventory?

c) What is the average number of stockouts (stockout units) per order cycle?

d) What is the total number of stockout units in a year? Please Show all work.

Reference no: EM131794239

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