Question: 6-4 Given this information: Average weekly demand = 100 units. Standard deviation = 10 units. Lead time = 6 weeks. Acceptable stockout risk = 2.5%
| 6-4 | Given this information: | |
| Average weekly demand = 100 units. | ||
| Standard deviation = 10 units. | ||
| Lead time = 6 weeks. | ||
| Acceptable stockout risk = 2.5% | ||
| Ordering cost = $30 | ||
| Annual Holding cost = 20% | ||
| Unit cost (purchase price) = $20 | ||
| The company operates = 50 weeks a year. | ||
| Weekly usage rates are distributed normally. | ||
| Determine each of the following, assuming that lead time demand is distributed normally: | ||
| a. Order quantity (EOQ). | ||
| b. The safety stock needed to attain a 2.5 percent risk of stockout during lead time. | ||
| c. The reorder point (ROP) that will provide a risk of stockout of 2.5 percent during lead time. |
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