Calculate optimal order quantity and the reorder point

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Reference no: EM132219968

In all cases, you may assume that demand is normally distributed. 1. Consider a convenience store that sells cigarettes that it orders weekly from its supplier. The weekly demand for brand X is 127 packs per week, spread evenly across the year. Each pack costs the store $4.35 and sells for $6.75. The forecast CV is of 20%. The lead time from order to receipt is 3 weeks. The desired service level is 97%. The annual holding cost rate 24% and the ordering cost is estimated to be $35 per order. Calculate the optimal order quantity and the reorder point (ROP). Show all work.

Reference no: EM132219968

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