What should the reorder point be for an inventory system

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Reference no: EM131143063

Roscoe’s Maple bar sells frozen maple bars purchased from a vendor that remain as fresh as they have ever been for essentially an unlimited time in the freezer. They are open 365 days of the year with average daily demand of 100 (standard deviation 25). Including cost of capital and cost of freezer space, the estimate that each bar costs about $4 per year per bar for inventory. They estimate that it costs about $50 each time they receive a shipment of bars to unload the truck, sign the paperwork, etc. What is the economic order quantity? The boss says “I would be willing to live with about one stockout per year .” Given that the lead time is 2 days (standard deviation 1 day), what should the reorder point be for an (R,Q) inventory system?

Reference no: EM131143063

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