Chapter 13, Problem 22P

In Problem 12-2 in Chapter 12, Carpel City orders Soft Shag carpet from its own mill. Using the three-month moving average forecast of demand for month 9 as the monthly forecasts for all of next year, a production rate at the mill of 1200 yards per day (and the mill operates 260 days per year), an annual carrying cost of $0.63, the cost of setting up a production run and delivering the carpet to the store is $425, and a lead time to receive an order of 7 days, determine the optimal order size, the minimum total annual inventory cost, and the reorder point (given that Carpet City is open 360 days per year).