Question: One item a computer store sells is supplied by a vendor who handles only that item. Demand for that item recently changed, and the store

One item a computer store sells is supplied by a vendor who handles only that item. Demand for that item recently changed, and the store manager must determine when to replenish it. The manager wants a probability of at least 96 percent of not having a stockout during lead time. The manager expects demand to average a dozen units a day and have a standard deviation of two units a day. Lead time is variable, averaging four days with a standard deviation of one day. Assume normality and that seasonality is not a factor.
a. When should the manager reorder to achieve the desired probability?
b. Why might the model not be appropriate if seasonality were present?

Step by Step Solution

★★★★★

3.52 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Given Service level 96 a Determine the ROP Using App... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

372-B-M-L-O-M (3344).docx

120 KBs Word File

Students Have Also Explored These Related Management Leadership Questions!

Probability of at least 2 traffic tickets this year The given values are discrete. Use the continuity correction and describe the region of the normal distribution that corresponds to the indicated...

A computer store sells an average of 1000 new iPhones each year. Annual demand is normally distributed with a standard deviation of 41 iPhones. The store orders directly from Apple. Each order is...

A computer store sells hard disks purchased from a supplier, with a lead time of exactly 3 weeks. Weekly demand for hard disks has a normal distribution with mean 38 and variance 130. Each hard disk...

One item a computer store sells is supplied by a vendor who handles only that item. Demand for that item recently changed, and the store manager must determine at what inventory level to replenish...

Chapter 12, problem 23 A company uses 85 circuit boards a day in a manufacturing process. The person who orders the boards follow this rule: Order when the amount on hand drops to 625 boards. Orders...

Chapter 12, problem 24. One item a computer store sells is supplied by a vendor who handles only that item. Demand for that item recently changed, and the store manager must determine when to...

Skinner's Fish Market buys fresh Boston bluefish daily for $4.20 per pound and sells it for $5.70 per pound. At the end of each business day, any remaining bluefish is sold to a producer of cat food...

Pohio Incorporation is considering investing in a new business. An existing company in the target industry has an equity beta of 1.25 but is financed with a market value, equity-to-value ratio 60%....

What financial statements are used to prepare the statement of cash flows?

9.134 Suppose that you are interested in estimating the average number of miles per gallon of gasoline your car can get. You calculate the miles per gallon for each of the next nine times you fill...

When the narrator listens to the old legends in the final two paragraphs, she references animals and nature many times. Why do you think she does this? How does it contribute to the atmosphere?

What are some of the advantages of e-business?

Describe some of the challenges in creating an effective supply chain and some of the trade-offs involved.

Discuss the issues involved in managing returns.

x Y Z Corporation is considering acquiring ABC Company. x Y Z estimates that the acquisition will generate additional free cash flows of 1 . 2 million dollars per year, in perpetuity. XYZ...

Jasper Furnishings has $350 million in sales. The company expects that its sales will increase 13% this year. Jasper's CFO uses a simple linear regression to forecast the company's inventory level...

SOLVE EXCEL PLEASE 2. Brandon buys a piece of equipment for $15,000. He pays $5,000 for upgrades in year 1 and the equipment generates $2,000 in cash flow for year 1 . In year 2 the equipment...