Question

In: Advanced Math

A product with an annual demand of 900 units has Co = $18.50 and Ch =...

A product with an annual demand of 900 units has Co = $18.50 and Ch = $7. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with µ = 26 and σ = 6. Note: Use Appendix B to identify the areas for the standard normal distribution.

a) What is the recommended order quantity? Round your answer to the nearest whole number.

b) What are the reorder point and safety stock if the firm desires at most a 5% probability of stock-out on any given order cycle? If required, round your answers to the nearest whole number.

Record point =

Safety stock =

c ) If a manager sets the reorder point at 32, what is the probability of a stock-out on any given order cycle? If required, round your answer to four decimal places. P(Stockout/cycle) =

Solutions

Expert Solution

The answer for above problem is explained below.

Colby Messinger answered 1 year ago
Next > < Previous

Related Solutions

Demand for a particular product was found to change from 1200 units to 900 units when...
Demand for a particular product was found to change from 1200 units to 900 units when the income of the consumer fell from Rs. 45,000 to Rs. 41,000. Compute the income elasticity of demand for the product.
Problem 2. The annual demand for a product is 15,600 units. The weekly demand is 300...
Problem 2. The annual demand for a product is 15,600 units. The weekly demand is 300 units with a standard deviation of 90 units. The cost to place an order is $31.20, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is $0.10 per unit. Find the reorder point necessary to provide a 98 percent service probability. Suppose the production manager is asked to reduce the safety stock of this time by 50 percent....
ABC Manufacturing produces a product for which the monthly demand is 900 units. Production averages 100...
ABC Manufacturing produces a product for which the monthly demand is 900 units. Production averages 100 units per day. Holding costs are $2.00 per unit per year, and setup cost is $200.00. the company operates 240 days per year a. If the company wishes to produce this product in economic batches, what size batch should be used? b. What is the maximum inventory level?           c. What is the average inventory?             d. How many order cycles...
The annual demand for a product is 1,000 units. The company orders 200 units each time...
The annual demand for a product is 1,000 units. The company orders 200 units each time an order is placed. The lead-time is 6 days, and the company has determined that 20 units should be held as a safety stock. There are 250 working days per year. What is the reorder point?
(7) The annual demand for a product is 500,000 units. The inventory carrying cost for this...
(7) The annual demand for a product is 500,000 units. The inventory carrying cost for this product is 25% per unit per year and the cost of placing one order is $200. The supplier of this product gives quantity discounts outlined in the table below. Level 1 Level 2 Level 3 Level 4 If Quantity is: 1 to 1999 2000 to 9999 10000 to 49999 50000 or higher Price $     20.00 $            19.80 $     19.75 $     19.70 Provide the following...
Demand is projected to be 600 units for the first half of the year and 900...
Demand is projected to be 600 units for the first half of the year and 900 units for the second half. The monthly holding cost is $2 per unit, and it costs $55 to process an order. Assuming that monthly demand will be level during each of the six-month periods covered by the forecast (e.g., 100 per month for each of the first six months), determine an order size that will minimize the sum of ordering and carrying costs for...
Victor Pimentel uses 900 units per year of a certain subassembly that has an annual holding...
Victor Pimentel uses 900 units per year of a certain subassembly that has an annual holding cost of ​$80 per unit. Each order placed costs Victor ​$90. He operates 300 days per year and has found that an order must be placed with his supplier 4 working days before he can expect to receive that order a) The economic order quantity is ___units ​(round your response to the nearest whole​ number). ​b) The annual holding cost is ___(round your response...
The annual demand for a certain product sold in a department store is 1,000 units. Ordering...
The annual demand for a certain product sold in a department store is 1,000 units. Ordering cost per order is $50, holding rate is 40%, and unit cost is $200. The department store currently is ordering every two months, but now is offered the following quantity discount scheme: For an order of up to 99 units no discount. For an order up to 699 units-a discount of 25%, and for a larger order -a discount of 30%. What is the...
The annual demand for a certain product sold in a department store is 1,000 units. Ordering...
The annual demand for a certain product sold in a department store is 1,000 units. Ordering cost per order is $50, holding rate is 40%, and unit cost is $200. The department store currently is ordering every two months, but now is offered the following quantity discount scheme: For an order of up to 99 units no discount. For an order up to 699 units-a discount of 25%, and for a larger order -a discount of 30%. What is the...
Stylez Corp. has a monthly demand of 2,000 units for a product. The product is used...
Stylez Corp. has a monthly demand of 2,000 units for a product. The product is used at a constant rate over the 365 days. The annual holding cost for the product is estimated to be $4.00 per unit and the cost of placing each order is $150.00. Current order quantity ( lot size) is 1000 units. 1) What is the total annual inventory cost for Stylez Corp, if it orders as per EOQ? 2) What is the extra cost, if...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT