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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