How much inventory to order when conducting periodic review

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Weekly demand for DVD-Rs at a retailer is normally distributed with a mean of 1,000 boxes and a standard deviation of 150. Currently, the store places orders to the supplier, with a reorder point of 4,200 boxes. The order quantity to the supplier is fixed at 5,000 boxes. Replenishment lead time is 4 weeks, fixed order cost per order is $100, each box costs the retailer $10, and the inventory holding cost is 25% per year.

Under the current order quantity of 5,000 boxes (not the EOQ you calculated before) and current reorder point of 4,200 boxes (not the calculated reorder point), what would be the order-up-to level S that the retailer should use as a baseline to calculate how much inventory to order when conducting a periodic review?

Reference no: EM132239340

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