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Calculate the economic order quantity

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Reference no: EM133093112

Question - Tax Preparers Inc. works 280 days per year. The company uses adding machine tape at a rate of 6 rolls per day. Usage is believed to be normally distributed with a standard deviation of 3 rolls during lead time. The cost of ordering the tape is $17 and holding costs are $0.24 per roll per year. Lead time is 3 days.

Required -

(a) Calculate the economic order quantity.

(b) What reorder point will provide an order cycle service level of 97 percent?

(c) How much safety stock must the company hold to have a 97 percent order-cycle service level?

(d) What reorder point is needed to provide an order-cycle service level of 99 percent?

(e) How much safety stock must the company hold to have a 99 percent order-cycle service level?

Reference no: EM133093112

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