What order quantity should they use

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Reference no: EM133647942

Question: SternCo buys very expensive brochures. They buy in quantity because there is a fixed charge every time they order, of $1,000. The brochures cost $8.00 each after the fixed charge is paid. The company they buy from has a variable lead time, normally distributed with u = 3.0 weeks and beta = 1.0 week. The demand is also normally distributed with u = 1000 per week and o = 200 per week. The cost of carrying inventory is 3% of the item value per week. What order quantity should they use?

Reference no: EM133647942

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