Let’s provide our skills to assist BADS Inc in adding a new product to their sales. Recall that we explored their inventory management and sales of food processors in the textbook example. Now they plan to sell bread making machines from a supplier located in Hungary. Due to the popularity of fresh, hot bread, their sales department believes that they can sell 27,350 bread machines each year. They want to plan out their inventory strategy. Each order for bread making machines is very time consuming since the orders must be translated from English into Hungarian so the cost for each order placed is $275.
The lead time for orders is 2 months.
It is also important to note that it costs $27 to hold a bread machine for one year.
Sales estimates that the demand, which is normally distributed will have a standard deviation of 1,250.
Determine the reorder points for SLM1 of 75%, 85%, 95% and 99.99%.