Question
In: Operations Management
Your firm uses a continuous review system and operates 52 weeks per year. One of the...
Your firm uses a continuous review system and operates 52 weeks per year. One of the SKUs has the following characteristics. Refer to the Z values.
>Demand (D) = 20,600units / (year)
>Ordering cost (S) = $45.00/order
>Holding cost (H)=$3.00/unit/year
> Lead (L) = 1 weeks
>Cycle-service |evel=96%
>Demand is normally distributed, with a standard deviation of weekly demand of 103 units.
>Current on-hand inventory is 1,040 units, with no scheduled receipts and no backorders.
The item's economic order quantity is ___ units.
The average time between orders is ___ weeks
To provide a 96 percent cycle-service level the safety stock for this item is _____ units.
To provide a 96 percent cycle-service level, the reorder point for this item is ______.
For these policies the annual cost of holding the cycle inventory is _______ and annual cost of placing orders is______.
Solutions
Expert Solution
(A)
Annual demand (D) = 20,600 units
Ordering cost per order (S) = $ 45
Annual Holding cost per unit (H) = $ 3
EOQ = 786.13 units
EOQ = 786 Units (rounded off to nearest whole number)
EOQ = 786 units
(B)
Given number of weeks = 52
Average time between orders = (Q/D) × Number of weeks
Average time between ordere = (786/20,600) × 52
Average time between orders = 1.98 weeks (rounded off to 2 decimals)
(C)
Given Standard Deviation (
)
= 103 units
Lead time (L) = 1 week
Service level = 96%
Value of Z corresponding to service level of 96% = 1.75
Safety Stock = 1.75 × 103 × 1
Safety Stock = 180.25 units
Safety Stock = 180 (rounded off to nearest whole number)
Safety Stock = 180 units
(C)
Annual demand (D) = 20,600
Number of weeks = 52
Daily demand (d) = 20,600/52
Daily demand (d) = 396.154 units
Re-Order Point = (d × L) + Safety Stock
Re-Order Point = (396.154 × 1) + 180
Re-Order Point = 576.154 units
Re-Order Point = 576 units (rounded off to next whole number)
Re-Order Point = 576 units
(D)
Annual Holding cost = (Q/2) × H
Annual Holding cost = (786/2) × 3
Annual Holding cost = $ 1,179
Annual cost of placing order = (D/Q) × S
Annual cost of placing order = (20,600/786) × 45
Annual cost of placing order = $ 1,179.389
Annual cost of placing order = $ 1,179.39 (rounded off to 2 decimals)
keosha answered 1 year agoRelated Solutions
Your firm uses a continuous review system and operates 52 weeks per year. One of the...
Sam's Cat Hotel operates 52 weeks per? year, 5 days per? week, and uses a continuous...
Sam's Cat Hotel operates 5252 weeks per? year, 77 days per? week, and uses a continuous...
Problem 13: Sam's Cat Hotel operates 52 weeks per year, 6 days per week, and uses...
Sam's Cat Hotel operates 52 weeks per year, 7 days per week
Problem 1: An ophthalmologist’s office operates 52 weeks per year. It purchases disposable contact lenses...
1: A museum of natural history opened a gifl shop which operates 52 weeks per year....
The Discount Appliance Store uses a continuous review system (Q system).
A company orders every 8 weeks. 52 weeks/8 weeks per order = 6.5 orders per year....
for a firm that assumes 52 weeks a year, every 6 years there will be extra...
- If you are to be responsible in Supply Chain and Logistics management for a company in...
- This is for Python programming, and I am trying to use 2 for loops to ask...
- An aquifer has a T = 150 m²/day, S = 0.0001, and provides a flow of...
- Create an object call Accounts using python for a banking system. Initialize the account with three...
- C++ 11.11: Customer Accounts A student has established the following monthly budget: 500.00 Housing 150.00 Utilities...
- Obesity is caused by the food industry. Thesis paper
- the first few hops are the same for various websites? . Then briefly describe what is...