Tobacco is shipped from Tillsonburg, Ontario, to a cigarette manufacturer in Cambodia once a year. The reorder

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Tobacco is shipped from Tillsonburg, Ontario, to a cigarette manufacturer in Cambodia once a year. The reorder point, without safety stock, is 200 kilograms. The carrying cost is $15 per kilogram per year, and the cost of a stockout is $70 per kilogramper year. Given the following demand probabilities during the lead time, how much safety stock should be carried?

Demand During Lead Time (kg)           Probability
0 .......................................................................    0.1
100 ...................................................................    0.1
200 ...................................................................    0.2
140 ...................................................................    0.4
100 ...................................................................    0.2

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Related Book For  book-img-for-question

Operations Management Sustainability and Supply Chain Management

ISBN: 978-0133764345

2nd Canadian edition

Authors: Jay Heizer, Barry Render, Paul Griffin

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