A regional distributor purchases discontinued appliances from various suppliers and then sells them on demand to retailers in the region. The distributor operates 5 days per week, 52 weeks per year. Only when it is open for business can orders be received. Management wants to re-evaluate its current inventory policy, which calls for order quantities of 440 counter-top mixers. The following data re estimated for the mixer:
- Average daily demand () = 100 mixer
- Standard deviation of daily demand ()= 30 mixers
- Lead time (L) = 3 days
- Holding cost (H) = $9.40 / unit / year
- Ordering cost (S) = $35 / order
- Cycle-service level = 92%
- The distributor uses a continuous review (Q) system
What order quantity (Q) should be used (round to the nearest whole number)
What reorder point, R, should be used? (Round to the nearest whole number)
What is the total annual inventory cost? (To two decimal places with no dollar signs or commas)
If on-hand inventory is 40 units, one open order for 440 mixers is pending, and no backorders exist, what is the inventory position?
Should a new order be placed? (Yes or No)
