A Distributor of Consumer Appliances Wants to Calculate the Reorder $\quad 300$

question 28

Essay

A distributor of consumer appliances wants to calculate the reorder point for a popular model of microwave oven.It operates 365 days a year, and wishes to maintain a 98% unit service level.OtherAnnual demand: $\quad 300$ units
Lead time: $\quad 5$ days
Standard deviation of demand during lead time: 7 units Order quantity $\left( \mathrm { Q } ^ { * } \right) : 25$
A.What is the reorder point, R?
B.What major assumption underlies the application of this technique?
C.Is the safety stock suggested here different than it would be for a cycle service level of 98%?