A distributor of large appliances needs to determine the order quantities and reorder points for the various products it carries. The following data refer to a specific refrigerator in its product line: Cost to place an order $ 50 Holding cost 20 percent of product cost per year Cost of refrigerator $ 400 each Annual demand 540 refrigerators Standard deviation during lead time 8 refrigerators Lead time 13 days Consider an even daily demand and a 365-day year.
a. What is the economic order quantity? (Round your answer to the nearest whole number.)
b. If the distributor wants a 90 percent service probability, what reorder point, R, should be used? (Use Excel's NORMSINV() function to find the correct critical value for the given α-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)
Reorder point refrigerators