Question
In: Operations Management
It is your responsibility, as the new head of the automotive section of Nichols Department Store,...
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. (Round
your answer to the nearest whole number.)
b. Determine the reorder point. (Use
Excel's NORM.S.INV() function to find the z value. Round z value to
2 decimal places and final answer to the nearest whole
number.)
Solutions
keosha answered 4 hours agoRelated Solutions
Automotive Department Store Automotive Department Store Formula 582 456 Part a 1513 465 Mean (to 2...
Automotive
Department Store
Automotive
Department Store
Formula
582
456
Part a
1513
465
Mean (to 2 decimals)
#N/A
#N/A
1574
476
1636
562
Part b
1712
583
Standard Deviation (to 2 decimals)
#N/A
#N/A
1724
596
1789
599
Part c
1792
624
Maximum
#N/A
#N/A
1804
627
2005
664
Minimum
#N/A
#N/A
2013
702
2032
712
Range (to 1 decimal)
#N/A
#N/A
2061
746
2171
764
Part d
2206
779
First Quartile (to 2 decimals)
#N/A
#N/A
2251
830
2365...
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Stockholders’
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Last Year
Common stock, Class
A—116,600,308 and 116,455,495 shares issued; ? and ? shares
outstanding
1,166,000
1,165,000
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42,000
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777,055,000
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What is the internal rate of return? (Do not round intermediate
calculations. Enter your answer as a percent rounded to 2 decimal
places.)
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