Question

We are given the following information for a product: Order cost = $50

Annual demand = N(960, 3,072.49) Annual holding cost = $6/item/year Shortage cost = $80 per unit
Lead time = one month

Sales price = $40 per unit

Product cost = $30 per unit
a.) Determine the order quantity and the reorder point under the assumption that all demands are backordered.

b.) Determine the order quantity and reorder point un- der the lost sales assumption.

Note: There is already a textbook solution for this but it has four dislikes, so I feel like the solution is incorrect.

Answer 1

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