Daily Demand for Packages of Five Videotapes at a Warehouse

question 53

Essay

Daily demand for packages of five videotapes at a warehouse store is found to be normally distributed with mean 50 and standard deviation 5.When the store orders more tapes,the ordering cost is $42 and the orders take four days to arrive.Each pack of tapes costs $7.20,and there is a 24% annual holding cost for inventory.Assume the store is open 360 days a year.
a.What is the EOQ?
b.If the store wants the probability of stocking out to be no more than 5%,and demand each day is independent of the day before,what reorder point should be set?
c.How much of your reorder point in part b)is safety stock?

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Definitions:

Thenar

Refers to the fleshy mass on the palm of the hand at the base of the thumb, consisting of muscles involved in thumb movements.

Perineum Muscle

The perineum muscle refers to the muscles located in the perineal region, between the anus and the genitals, important for supporting pelvic floor structures.

Bulbospongiosus

A muscle of the perineum that is involved in the erection of the penis and clitoris and the ejaculation of semen in males.

Superficial

Concerning or affecting only the surface or appearance of something, not deep or profound.