Anvils Works requires, on average, 2800 tons of aluminum each week, with a standard deviation of 1000
Question:
Anvils Works’ requires, on average, 2800 tons of aluminum each week, with a standard deviation of 1000 tons. The lead time to receive its orders is 10 weeks. The holding cost for one ton of aluminum for one week is $11. It operates with a 0.98 in-stock probability
a. On average, how many tons does it have on order?
b. On average, how many tons does it have on hand?
c. If its average inventory was 5000 tons, what would be its average holding cost per week?
d. If its average inventory was 10,000 tons, what would be its average holding cost per ton of aluminum?
e. Suppose its on-hand inventory is 4975 tons, on average. What instock probability does it offer to its customers?
Step by Step Answer:
Operations Management
ISBN: 9781260547610
2nd International Edition
Authors: Gerard Cachon, Christian Terwiesch