Chapter 12, Problem 22P

(a)

Summary Introduction

Interpretation:

The economic order quantity

Concept Introduction:

The economic order quantity to get use the formula $EOQ=\sqrt{\frac{2\times demand\times ordering\cos t}{unitinventoryholding\cos t}}$

(b)

Summary Introduction

Interpretation:

The reorder point will provide an order-cycle service level of $97$ percent.

Concept Introduction:

The order service level is determined using the formula $reorderpo\mathrm{int}=d\times leadtime+safetystock$

(c)

Summary Introduction

Interpretation:

The safety stock must the company hold to have a $97$ percent order cycle service level.

Concept Introduction:

To get the safety stock all over use the formula $safetystock(SS)=z\times s\tan darddeviationduringleadtime$

(d)

Summary Introduction

Interpretation:

The reorder point is needed to provide an order cycle service level of $99$ percent.

Concept Introduction:

To get the reorder point an order cycle use the formula $reorderpo\mathrm{int}=d\times leadtime+safetystock$

(e)

Summary Introduction

Interpretation:

the safety stack must the company hold to have a $99$ percent order cycle service level.

Concept Introduction:

To get the safety stock use the formula $safetystock(SS)=z\times s\tan darddeviationduringleadtime$