The store by suggesting new order quantity

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Reference no: EM132307691

A sports apparel store is ordering 400 pairs of its best selling shoes every time it orders the shoes. The daily demand is 50 pairs, with a daily standard deviation of 5 pairs. It takes 4 days to receive a new order from its supplier. The order cost is $25, and the inventory holding cost is 25% of the cost of the shoes, which is $100 per pair. The store is open 350 days a year.

How much money can you save the store by suggesting a new order quantity?

Determine the rule for the inventory clerk in charge of this pair of shoes using Q system? Assume the store does not like to turn back customers, and therefore, they would like a 99% probability of not running out of stock.)

Reference no: EM132307691

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