It is forecasted that the demand on product B in 2015 is 3000 units. To produce a
Question:
It is forecasted that the demand on product B in 2015 is 3000 units. To produce a unit of product B, it requires 2 units of material K. Material K is supplied by a vendor. The order cost is 100 USD per order. The purchasing price of a unit of material K is based on the quantity of an order and given as follows
Quantity___________ Purchasing price (USD/unit
0 – 1499…………………………………………12
1500 – 2999……………………………………..10
? 3000…………………………………………….8
The annual holding cost is estimated as 5 % of purchasing cost.
Suppose that the lead-time for an order in question a. is normally distributed with the mean of 4 days and the standard deviation of 2 days. It is assumed that the company has 300 working days a year. What is the reorder point (ROP) if the service level is 98%?