A product with an annual demand of 1000 units has Co = $25.50 and Ch = $8. The demand exhibits some variability such that the le
ad-time demand follows a normal probability distribution with μ=25 and σ=5. a.What is the recommended order quantity? b. What are the recorder point and safety stock if the firm desires at most a 2% probability of stockout on any given order cycle? c. If a manager sets the reorder point at 30, what is the probability of a stockout on any given order cycle? How many times would you expect a stockout during the year if the reorder point were used?
1 answer:
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Answer: She should budget $672.89 monthly next year for this service.
Step-by-step explanation:
Since we have given that
Amount he was able to save per month = $48.50
Total amount he spent for the year = $1254.89
Amount he saved for the year would be
Amount left from total would be
Hence, She should budget $672.89 monthly next year for this service.