A well-known warehouse store has a contract with a manufacturer for its store-brand 12- roll package of
Question:
A well-known “warehouse" store has a contract with a manufacturer for its "store-brand" 12- roll package of paper towels. The warehouse store pays $8 per package and sells a package for $10. Daily demand at a typical store in a quiet suburban area averages about 300 packages and has a standard deviation of 60. The store is open 350 days per year. The manufacturer is in another state and charges $750 per truck for each delivery. Each truck can hold up to 5000 packages and takes 2 days from the time an order is placed until the goods are available on the shelf of the warehouse store. According to the terms of the contract with the manufacturer, the order quantity is restricted to be a multiple of 100. The store uses an annual holding cost rate of 80% for paper and plastic goods.
Suppose the manager wants to maintain a 95% chance of not stocking out during the lead time. What order quantity and reorder point would you recommend?
Vector Mechanics for Engineers Statics and Dynamics
ISBN: 978-0073212227
8th Edition
Authors: Ferdinand Beer, E. Russell Johnston, Jr., Elliot Eisenberg, William Clausen, David Mazurek, Phillip Cornwell