Illustrate what is economic order quantity for ben to order
Operation Management
Q. Gentle Ben’s Bar also Restaurant uses 5,000 quart bottles of an imported wine each year. Effervescent wine costs $3 per bottle also is served in whole bottles only since it loses its bubbles quickly. Ben figures which it costs $10 each time an order is placed, also holding costs are 20 percent of purchase price. It takes three weeks for an order to arrive. Weekly demand is 100 bottles (closed two weeks a year) with a standard deviation of 30 bottles.
Ben would like to use an inventory system which minimizes inventory cost also will satisfy 95 percent of his customers who order this wine.
a. Illustrate what is economic order quantity for Ben to order?
b. At illustrate what inventory level should he place an order?
