What is the best reorder point

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A regional distributor purchases discontinued appliances from various suppliers and then sells them on demand to retailers in the region. The distributor operates 5 days per week, 52 weeks per year. Only when it is open for business can orders be received. Management wants to reevaluate its current inventory policy. The following data are estimated for the mixer:

Average daily demand 100 mixers

Replenishment lead time 3 days

Standard deviation of demand (daily) 30 mixers

Desired service level 95%

Ordering cost $35/order

Holding cost $9/unit/year

What are the best order quantity Q?

What is the best reorder point?

If on-hand inventory is 400 mixers, there are 30 mixers of backorders and no open orders pending, should a new order be placed?

Reference no: EM132742065

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