Question

In: Operations Management

Al’s Florist places orders for vases every 12 days. Once an order is placed, it takes...

Al’s Florist places orders for vases every 12 days. Once an order is placed, it takes four days for it to arrive. The store sells on average 30 vases per day, with a standard deviation of 8. Al’s wants to ensure that it can satisfy 90% of the customers who demand vases. Assume that the sales representative just walked in the door and there are currently 7 vases in the back.

a) How many vases would you order?

b) What is the largest amount Al’s will ever have to order?

Solutions

Expert Solution

Review Period T = 12 days

Lead Time L = 4 days

Daily Sales d = 30 vases

SD of daily sales = 8

Service Level = 90%

Z = NORM.S.INV(0.90) = 1.2816

I = 7

a)

Order Quantity Q = d*(L+T) + Z*Sd*(L+T)^(1/2) - I

Q = 30*(4+12) + 1.2816*8*(12+4)^(1/2) - 7

Q = 514.0112

Q = 514 vases

b)

Optimal Order Quantity Q = d*(L+T) + Z*Sd*(L+T)^(1/2)

Q = 30*(4+12) + 1.2816*8*(12+4)^(1/2)

Q = 521.0112

Q = 521 vases

keosha answered 1 year ago
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