In: Operations Management
FQ3. Annual demand is 12500 units, cost per order is $60 and
carrying cost per unit...
FQ3. Annual demand is 12500 units, cost per order is $60 and
carrying cost per unit as a percentage is 8%. The
company works 50 weeks a year; the lead-time on all orders placed
is 5 weeks.
- Assuming constant lead-time demand, and a unit cost of $40 what
is the economic order quantity? What is the reorder point.
- If lead-time demand shows variability that follows a normal
distribution with a mean μ =280 and a standard deviation σ =20,
what will the revised reorder point if two stock-outs (shortages)
are allowed?
- What is the company’s reorder point if the probability of a
stock-out on any cycle is restricted to 0.05?