What will be the total cost of the plan

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Q.1 The daily demand for an item is stochastic and follows the normal distribution with a mean of 100 and a standard deviation of 20. The supplier of the item takes two weeks to deliver the item from the date the order is placed.

a) What will be the appropriate reorder point for 90 per cent and 95 per cent service level?

The cost of ordering is $1,000 per order and the carrying cost is $250 per unit per year. There are 250 working days in a year. If the organization places orders in fixed quantities of 500, what will be the total cost of the plan?

Reference no: EM132978440

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