# Suppose a distributor faces an annual demand for a car horn for small cars that is normally…

Suppose a distributor faces an annual demand for a car horn

for small cars that is normally distributed with a mean of 2300 items and a

standard deviation of 300. The cost of placing an order is $150 and the holding

cost is $10/item/year. The replenishment lead time is 9 days (assume 352 days

in a year). Answer the following:

a. Compute the economic order quantity (EOQ).

b. If a service level of 5% is desired, what should R be in

the (Q, R) model?

c. For your answer to part (b), what is the average cycle,

safety, and pipeline stock equal to?