What is the optimal order quantity and safety stock

Assignment Help Operation Management

Reference no: EM13957479

The new office supply discounter, Paper Clips, Etc. (PCE), sells a certain type of ergonomically correct office chair that costs $400. The annual holding cost rate is 40% of the item cost, annual demand is 1200 units, and the ordering cost is $25 per order. The lead time is 8 days. Because demand is variable (standard deviation of daily demand is 2.4 chairs), PCE has decided to establish a customer service level of 90% (Z=1.28). The store is open 300 days per year.

a) What is the optimal order quantity?

b) What is the safety stock?

c) What is the reorder point?

Reference no: EM13957479

Questions Cloud

Find two nonprofits of your interest : Find two nonprofits of your interest. Write a brief summary of your findings (such as name of the nonprofit, what type of work these nonprofits do, and why you chose these 2 nonprofits?).

Some providers stop accepting some payer patients : Some providers stop accepting some payer patients because they feel that the reimbursement does not meet the cost. Are there alternatives here to deal with this issue?

What if the patient does not understand the information : It is important for the doctor to communicate the information and it is important for the patient to understand it. What if the patient does not understand the information and does not know he/she does not?

Different ways in which human beings value human labor : What accounts for the different ways in which human beings value human labor? For instance, many people would value the services of a lawyer and pay whatever the lawyer said they must pay, yet they would object to such demands from employees of a bus..

What is the optimal order quantity and safety stock : The new office supply discounter, Paper Clips, Etc. (PCE), sells a certain type of ergonomically correct office chair that costs $400. The annual holding cost rate is 40% of the item cost, annual demand is 1200 units, and the ordering cost is $25 per..

Context for at least three activities of strategic leaders : Identify four research sources that provide context for at least three activities of strategic leaders. At least two of these must be from your own research. Using the resources you have identified, describe specific characteristics of leaders and ac..

Efforts be expended in order to increase profits : Better Fitness, Inc. (BFI), manufactures exercise equipment at its plant in Freeport, Long Island. It recently designed two universal weight machines for the home exercise market. How does the requirement that the number of units of the BodyPlus 200 ..

Role of project management in software implementation : Why is it important to have development and operations work together to build a secure software environment. Please explain in detail with examples. What is the role of project management in software implementation. Please explain in detail with exam..

User Account

All Pages