i, Matthew\'s Dream Store sells mattresses. His best-selling mattress has fairly

Question

i, Matthew's Dream Store sells mattresses. His best-selling mattress has fairly stable annual demand of 400 unt Ordering cost is $40, is of 2 weeks. Assume there are 52 weeks in one year ng cost is $40, unit cost is $100 and holding cost is $5 per unit per year. The mattress supplier has lead time (20 Paints) To minimize the total cost, how many units should be ordered each time an order is placed? a. Cirdle your answer b. What should be the store's reorder point? Circle your answer Extra credit what is the service level of this policy? You may pick either type of service level.

Explanation / Answer

a)

Q = sqrt(2* D * k/h)

= sqrt(2 * 400 * 40 / 5)

= 80

b)

dL = 400/52*2 = 15.3846

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