A sport clothing store sells a popular baseball team cap and classifies it as an A category item. The cap has a normally distributed monthly demand of 500 units (average). The standard deviation of the monthly demand is 12. The cap costs $10 a unit and sells for $15 a unit. The cost of capital for the store is 8% per year. The shipment against a replenishment order is received after 10 days of placing the order with the supplier. Each shipment from the supplier costs $20 in delivery charges and half an hour of staff’s time for storage. Staff is paid $16 an hour. What is the optimum order quantity and the reorder point for the cap if the store desires a 98% service level during the lead time? (Assume 30 days in a month. You can completely round the answers to the closest integer.)
A sport clothing store sells a popular baseball team cap and classifies it as an A category item. The cap has a
What is the optimum order quantity and the reorder point for the cap if the store desires a 98% service level during the lead time?
(Assume 30 days in a month. You can completely round the answers to the closest integer.)
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