A regional warehouse purchases hand tools from various suppliers and then distributes them on demand to retailers in the region. The warehouse operates five days per week, 52 weeks per year. Only when it is open can orders be received. Average daily demand = 100 drills Standard deviation of daily demand =30 drills Lead time = 3days Holding cost = $ 9.40/unit/yea r Ordering cost = $35/order Cycle-service level = 92%
(a). What is the eoq? What is the order quantity and reorder point should be used?
(b). For a 92% service level, what is the reoder point? How much is the safety stock If on-hand inventory is 40 units, there is one open order for 440 drills, and there are no backorders, should a new order be placed?