What order quantity should they use to minimize total cost

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Reference no: EM13736687

Answer the questions based on these information:

• Demand for their note pads is 2000 per week or 104000 per year.

• It costs them 25% of the purchase price to keep one note pad in inventory a year.

• The order cost is $ 50.

• The purchase price is $ 2.

• Demand is constant and uniform.

• The lead-time for the note pads is 3 weeks.

A) What order quantity should they use to minimize their total cost?

B) What would be the average inventory level for the note pads of this order quantity?

C) When should they place an order for notepads?

D) If the demand becomes variable (uncertain) rather than constant and uniform, and the company wants an 80% service level, what happens to the:

1) Optimal order quantity?

2) Reorder point?

Reference no: EM13736687

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