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The KAB Corporation’s daily demand for item XYZ is normally distributed with a mean of 50units. The replenishment lead time is 10 days, and the standard deviation of demand during leadtime is 12.65 units. The order cost is $40 and the unit holding cost per year is $3. KAB operates 365 days per year. Part A: What is the order size? Part B: What is the reorder point if a 90% cycle service level is desired? Part C: If the reorder point is instead set at 505, what is the implied cycle service level chosen by the company?

The KAB Corporation’s daily demand for item XYZ is normally distributed with a mean of 50units. The replenishment lead time is 10 days, and the standard deviation of demand during leadtime is 12.65 units. The order cost is $40 and the unit holding cost per year is $3. KAB operates 365 days per year.

Part A: What is the order size?

Part B: What is the reorder point if a 90% cycle service level is desired?

Part C: If the reorder point is instead set at 505, what is the implied cycle service level chosen by the company?

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