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Business, 04.12.2019 02:31 wesleygrimes0

It is your responsibility, as the new head of the automotive section of nichols department store, to ensure that reorder quantities for the various items have bene correctly established. you decide to test one item and choose michelin tires, xw size 185 x 14 bsw. a fixed-order quantity inventory system has been used: you examine the records and come up with the following data: cost per tire $35 each holding cost 20% of tire cost per year demand 1,000 per year ordering cost $20 per order standard deviation of daily demand 3 tires delivery lead time 4 days because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 98 percent. assume the demand occurs 365 days per year.

a. determine the order quantity.
b. determine the re-order point.
c. suppose you are asked to reduce the safety stock for this product by 50%, what will the new service level be?

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