Determining the economic order quantity of online store

Assignment Help Business Management

Reference no: EM131805222

An online store sells a product for which the daily demand is normally distributed with a mean of 120 units and with a standard deviation of 10 units. We assume the source of supply has a constant lead time of 14 days. The cost for placing an order is $75 and the annual holding cost per item is $0.5. There is no stock out cost and we assume that unfilled orders are filled as soon as the orders arrives. Sales operate 365 days/year. The company wants to have a 95% service level of not stocking out during the lead time.

1. What is the Economic Order Quantity (EOQ)?

2. What Safety Stock level does the company need to reach the desired service level?

3. What Re-Order Point (ROP) level does the company need to reach the desired service level?

Reference no: EM131805222

Questions Cloud

Product offering-general motor : Problem: What is one type of product could General Motor (GM) create or acquire to add to its product offering that it does not currently have?

How would you describe the evolution of abnormality : How would you describe the evolution of abnormality across time, and how do you define abnormality?

Discuss if the bonds were not convertible : Starting on March 31, 2021, holders on Crump bonds can convert each $1,000 bond into 30 shares of Crump's $5 par value common stock

What would be the total revenue at the break-even point : Crazy Crafters is a manufacturer of furniture items. What would be the total revenue at the break-even point

Determining the economic order quantity of online store : 1. What is the Economic Order Quantity (EOQ)? 2. What Safety Stock level does the company need to reach the desired service level?

Determining the standard deviation of online store : An online store sells a product for which the daily demand is normally distributed with a mean of 120 units and with a standard deviation of 10 units.

Portray the social expenses and advantages of government : Use financial investigation to portray the social expenses and advantages of government and open strategy decisions

Formulate 4 p strategies : Question: The operational, pricing etc. requirements to formulate 4 P strategies. What makes services unique, and how would you address these unique feature?

How much will business lose during first year of operation : If the banker believes Greg will only serve 100 families during the first year in business, how much will the business lose during its first year of operation?

User Account

All Pages