What will the new service probability be

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Annual demand for a product is 16,640 units; weekly demand is 320 units with a standard deviation of 55 units. The cost of placing an order is $160, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is $0.85 per unit.

To provide a 98 percent service probability, what must the reorder point be?

Suppose the production manager is told to reduce the safety stock of this item by 90 units. If this is done, what will the new service probability be?

Reference no: EM13844604

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