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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, 45 weeks per year. Only when it is open for business can orders be received. Management wants to re-evaluate its current inventory policy, which calls for an EOQ of 433 counter-top mixers. The following data are estimated for the mixer:
-Average daily demand = 114 mixers
-Standard deviation of daily demand ( = 30 mixers
-Lead time (L) = 3 days
-The distributor uses a Periodic review (P) system
Calculate the P (in workdays, rounded to the nearest one decimal) that gives approximately the same number of orders per year as the EOQ. (Do not include units in the answer)
Given the EOQ, what would be the average inventory? What would be the annual inventory holding cost?
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