Calculate the associated order policy

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Reference no: EM13105867

Consider the following for a purchased item.
time between reviews= 3 months
lead time= 2 months
unit cost= $590/unit
cost of capital= 20%
demand= 2773 units/year with
standard deviation= 84 units/year
desired cycle service level is 99.9%
ordering cost is insignificant
A. What is the associated order policy?
B. It is now the end of a review cycle. You are expecting a previously ordered shippment of 520 units to arrive within a week and you physcally have 493 units on hand. Considering the policy you developed in part A nowo, how many, if any at all, should you now order ?

Reference no: EM13105867

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