Question
In: Operations Management
i.Demand Range Model The average daily demand for a particular item is 438 with a standard...
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.
Solutions
Expert Solution
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 |
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