Assignment:
Question: Consider the data given in problem 16b at the end of Factory Physics. Assume that demand variability follows a Poisson distribution and that the desired service level is 98% probability of not stocking out. Calculate the best order quantity and reorder point for Module Type B.
The data given in 16b is as follows:
Model A: cost= $150 each, used at a rate of 7 per month, leed time= 1 month
Model B: cost=$15, used at a rate of 30 per month, leed time = 0.5 month
assume 1 month= 30 days
estimate to replenish an order is $5 regardless of model.
holding cost intrest rate is 3% per month