Daily demand for a certain product is normally distributed with a mean of 151 and a standard deviation of 12. The supplier is reliable and maintains a constant lead time of 4 days. The cost of placing an order is $21 and the cost of holding inventory is $0.60 per unit per year. There are no stock-out costs, and unfilled orders are filled as soon as the order arrives. Assume sales occur over 361 days of the year.
Your goal here is to find the order quantity and reorder point to satisfy a 61 percent probability of not stocking out during the lead time.
a. To manage inventory, the company is using
Continuous review system
Periodic review system
b. Find the order quantity. (Round your answer to the nearest whole number.)
Order quantity books
c. Find the reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given ?-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)
Reorder point