What is reorder point and order quantity

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Reference no: EM132250560

At each of nine sections , maintannance replace gasket .demand for this each section normally distributed with mean 400/ month std deviation 50/ month , each part cost 250$ fixed order cost 1000$( no limit for number of parts ordered, there is 1 month lead time between order and delivery of parts

The AF estimate holding cost 20% /year. Parts must be in stock 98% of the time

A) for individual section , what ordering policy would you recommend (assume continuous review of inventory level )? I.e , what is reorder point and order quantity? What is average inventory level accros all 9 sections of part?

B) In total of nine section determine annual order cost , holding cost and material cost ?

C) if we should pool the gasket part inventory for all 9 section in centralized warehouse, when the section need the part send it from warehous to section but shipment cost average 10$/part is that good idea ? (think about benefits and cost of pooling wat ar they and how they compare)

Reference no: EM132250560

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