Question: 1 . Marshall s paint store uses a ( Q , R ) inventory system to control its stock levels. For a particularly popular white
Marshalls paint store uses a Q R inventory system to control its stock levels. For a particularly popular white paint, historical data shows that the distribution of monthly demand is approximately normal, with mean and standard deviation Replenishment lead time for this paint is about weeks. Each can of paint costs the store $ Although excess demand is backordered, the store owner estimates that each unit of unfilled demands cost $ in bookkeeping and lossofgoodwill costs. Fixed cost of replenishment is $ per order, and holding costs are based on a percent annual rate of interest. Assume that there are weeks in a month and weeks in a year. Determine:
a The optimal lot size and reorder point.
Assuming that the policy in part a is used, determine:
b The safety stock.
c The average annual holding, setup and penalty costs separately
d The average time between placements of orders.
e The expected demand per cycle.
f The expected number of units backordered per cycle.
g The proportion of order cycles in which no stock out occurs.
h The proportion of demands that are backordered.
i The probability that there will not be any stockout during a cycle.
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