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An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The supplier pays $28 for each battery and estimates that the annual holding cost is 30 percent of the battery's value. It costs approximately $20 to place an order (managerial and clerical costs). Upon closer inspection, the supplier determines that the demand for batteries is normally distributed with mean 4 batteries per day and a standard deviation of 3 batteries per day. (The supplier is open 300 days per year.) It usually takes about 4 days to receive an order from the factory.
a. Determine Economic order quantity.
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