A product has a reorder point of 260 units,and is ordered ten times a year on average.The following table shows the historical distribution of demand values observed during lead time.
Currently,stockouts are valued at $5 per unit per occurrence,while inventory carrying costs are $2 per unit per year.Should the firm add safety stock? If so,how much safety stock should be added?
Definitions:
Payor Bank
The bank that is responsible for paying the check or draft as specified by the person making the payment.
Midnight Deadline
The end point, usually referred to the close of business, or 11:59 PM, by which a particular task or obligation must be completed.
Depositor
refers to an individual or entity that places money into a bank account with the expectation of withdrawing it later or using the banking services.
Payor Bank
The bank upon which a check is drawn and that is responsible for paying the amount specified on the check to the payee.
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