Click Pix, a large discount camera shop in New York City is open six days a week, 52 weeks a year. The store has recently begun carrying Sonic model PS58 camcorders, which cost $400.00 each and retail for $649.99. Sales average 1200 units a year. The cost of placing an order with Sonic is $90, and the lead time is seven working days. Click Pix uses an annual holding cost rate of 18% for the camcorders.
Furthermore, the store manager wants to have safety stock since this is a new product and the demand is not fully understood. The store estimates that the lead time demand follows a normal distribution with a mean of 70 units and a standard deviation of 15 units. Ideally, the store manager is trying to achieve 90% service level.
Since there is a number of questions associated with this problem, it is strongly recommended that you solve it on scratch paper (or Excel) that you can reference
Reorder point is:
70
60