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Unformatted text preview: an order
is $31.20, and the time from ordering to receipt is four weeks. The annual
inventory carrying cost is $0.10 per unit.
Find the optimal ordering quantity and the reorder point necessary to
provide a 98 percent service level. (Fact: NORMSINV(0.98) = 2.05) Suppose the production manager is asked to reduce the safety stock of
this item by 50 percent. If she does so, what will the new service level be?
(Hint: you can write the answer using the NORMSDIST function) 28 Next Class
Next Class Inventory Management III
– Fixed-Time Period Model
Time Period Model 29 Man Yu - Spring
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This note was uploaded on 02/20/2013 for the course ISOM 161 taught by Professor Manyu during the Fall '09 term at HKU.
- Fall '09