At Dot Com, a large retailer of popular books, demand is constant
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At Dot Com, a large retailer of popular books, demand is constant

Problem 6

At Dot Com, a large retailer of popular books, demand is constant at 32,000 books per year. The cost of placing an order to replenish stock is $10, and the annual cost of holding is $4 per book. Stock is received 5 working days after an order has been placed. Assume 300 working days a year.

a) What is Dot Com’s optimal order quantity?

b) What is the optimal number of orders per year?

c) What is the optimal interval (in working days) between orders?

d) What is the reorder point?

Hint
ManagementStock: It is also called as the equity. It is a security which represents the ownership of the fraction of a corporation. Also, this entitles the owner of the stock to a proportion of the assets and profits of the corporation which is equal to how much stock they own. Units of stock are known as the "shares."...
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