Nichols Department Store Case

Question # 00020465 Posted By: spqr Updated on: 07/21/2014 03:24 PM Due on: 08/21/2014
Subject Mathematics Topic General Mathematics Tutorials:
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It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 × 14 BSW. A perpetual inventory system has been used, so you examine this as well as other records and come up with the following data:

Cost per tire $35 each
Holding cost 20 percent of tire cost per year
Demand 1,000 per year
Ordering cost $20 per order
Standard deviation of daily demand 3 tires
Delivery lead time 4 days

Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 98 percent. Assume the demand occurs 365 days per year.
A. Determine the order quantity.
B. Determine the reorder point.


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  1. Tutorial # 00019850 Posted By: spqr Posted on: 07/21/2014 03:25 PM
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    The solution of Nichols Department Store Case...
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    Nichols_Department_Store_Case_Soln.xlsx (28.22 KB)

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