In: Operations Management
i.Demand Range Model
The average daily demand for a particular item is 438 with a standard deviation of 24. The current policy is to order enough items for 25 days. What is the likely range for that 25-day demand?
Determine the range with a calculation (mean +/- 3 stdev)
Determine the range with a simulation.
a)
Average Daily Demand = 438
STD, = 24
Order quantity = Average lead time demand + 3 = (25*438) +/- (2*24)
Order quantity range (10902,10998)
b.)
Simulation using Excel formula Randbetween(10902,10998). The range is (10904,10998)
1 | 10934 |
2 | 10924 |
3 | 10938 |
4 | 10974 |
5 | 10952 |
6 | 10929 |
7 | 10904 |
8 | 10934 |
9 | 10993 |
10 | 10997 |
11 | 10973 |
12 | 10944 |
13 | 10982 |
14 | 10962 |
15 | 10931 |
16 | 10907 |
17 | 10919 |
18 | 10986 |
19 | 10993 |
20 | 10914 |
21 | 10966 |
22 | 10960 |
23 | 10932 |
24 | 10936 |
25 | 10937 |
26 | 10937 |
27 | 10994 |
28 | 10990 |
29 | 10984 |
30 | 10941 |
31 | 10996 |
32 | 10981 |
33 | 10918 |
34 | 10911 |
35 | 10985 |
36 | 10981 |
37 | 10950 |
38 | 10977 |
39 | 10972 |
40 | 10920 |
41 | 10949 |
42 | 10964 |
43 | 10908 |
44 | 10997 |
45 | 10978 |
46 | 10932 |
47 | 10919 |
48 | 10937 |
49 | 10924 |
50 | 10946 |
51 | 10939 |
52 | 10906 |
53 | 10987 |
54 | 10952 |
55 | 10924 |
56 | 10998 |
57 | 10919 |
58 | 10998 |
59 | 10994 |
60 | 10938 |
61 | 10904 |
62 | 10980 |
63 | 10921 |
64 | 10910 |
65 | 10951 |
66 | 10920 |
67 | 10950 |
68 | 10990 |
69 | 10943 |
70 | 10910 |
71 | 10991 |
72 | 10924 |
73 | 10963 |
74 | 10969 |
75 | 10924 |
76 | 10921 |
77 | 10911 |
78 | 10990 |
79 | 10962 |
80 | 10929 |
81 | 10966 |
82 | 10928 |
83 | 10907 |
84 | 10948 |
85 | 10989 |
86 | 10983 |
87 | 10986 |
88 | 10991 |
89 | 10952 |
90 | 10978 |
91 | 10955 |
92 | 10971 |
93 | 10938 |
94 | 10990 |
95 | 10927 |
96 | 10928 |
97 | 10960 |
98 | 10942 |
99 | 10958 |
100 | 10934 |