Question: You manage inventory for your company and use a continuous
You manage inventory for your company and use a continuous review inventory system to control reordering items for stock. Your company is open for business 300 days per year. One of your most important items experiences demand of 20 units per day, normally distributed with a standard deviation of 3 units per day. You experience a lead time on orders from your supplier of 6 days with a standard deviation of 2 days. If you order less than 1,000 units, you pay the supplier $5.00 per unit. Orders of 1,000 or more can be bought at a unit price of $4.75. Your ordering cost is $50. Your inventory carrying cost is 20%. You have established a service level policy of 97.5% on this item. What is your optimal order quantity? What is your reorder point? How much safety stock do you carry? What is your average inventory?
Relevant QuestionsSuppose in problem 23, you were able to reduce your order cost to $10. What is the impact on all other variables? Bryson Carpet Mills produces a variety of different carpets. Changing from production of one carpet to another involves a setup cost of $1,000. One particular carpet cost $5/yard to produce. Annual demand for this style is ...Why is achievement of the following goals critical to the success of lean systems? Give an example of how each area contributes to the success of a lean system. a. Setup time and cost reduction b. A relatively stable shop ...Can a supply chain ever be too lean? What would happen to the supply chain if an unexpected disruption/interruption were to occur? How might you as a supply chain manager reduce the effects of such an unexpected disruption, ...The chapter offers one approach to customer management and relationship strategy based on sales volume and profitability. Can you think of other criteria that might be used to determine the most appropriate form of ...
Post your question