Determine eoq to minimize annual cost

Reference no: EM1392467

A product sold by Home Depot, Inc., with an annual demand of 1000 units has Co = $25.50 and Ch = $8. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with µ = 25 and standard deviation = 5.

a. Determine the recommended order quantity.

b. Determine the reorder point and safety stock if the firm desires, at most, a 2% probability of stock-out on any given order cycle.

c. If a manager sets the reorder point at 30, determine the probability of a stock-out on any given order cycle. Determine the number of times the manager should expect a stock-out during the year if this reorder point were used.

Reference no: EM1392467

Questions Cloud

Understanding the normal distribution : Critically discuss understanding the normal distribution and the factors that affect its shape important in solving business and marketing-related questions?

When should you gather information outside a case analysis : When should you gather information outside a case analysis by going to the library or using the Internet

What is the overall magnification of this microscope : The object to be viewed is placed 2mm beyond the focal point of objective lens. What is the overall magnification of this microscope.

Question about biochemical engineering : An open system in which the growth rate is maintained by adding a nutrient at the same rate as that medium containing micro-organisms is removed is called

Determine eoq to minimize annual cost : A product sold by Home Depot, Inc., with an annual demand of 1000 units has Co = $25.50 and Ch = $8. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution

What is the natural rate of unemployment : What is the real wage as determined by the price-setting equation and what is the natural rate of unemployment?

Policy of internal innovation of companies : Investigate and report on two companies. Choose one which has always adhered to policy of internal innovation and second which has obtained technology many times through external means.

Our legal system relies on several components : Our legal system relies on several components - Constitutions (federal and states), statutes, case law applied by judges, and regulations written by regulatory agencies.

Explain what is the correct banking angle of the road : If the string is 9.50 m long, has a mass of 55g and is pulled taut with a tension of 9.5 N, how much time does it take for a wave to travel from one end of the string to other.

User Account

All Pages