7.24 Consider an item under (s, l) control. Basic item information is as follows: D = 40,000 units/year; A - $20; r = 0.25 $/$/yr; v = $1.60/unit. All demand when out of stock is backordered. The EOQ is used to establish the value. A service level of 0.95 (demand satisfied without backorder) is desired. The item's de mand is somewhat difficult to predict and two forecast- ing procedures are possible. System A (complex) B (simple) Cost to Operate per Year ($/yr.) 200 (units) 1000 2300 35 PROBLEMS Which forecasting system should be used? Discuss. Note: Forecast errors can be assumed to be normally distributed with zero bias for both models. 7.24 Consider an item under (s, l) control. Basic item information is as follows: D = 40,000 units/year; A - $20; r = 0.25 $/$/yr; v = $1.60/unit. All demand when out of stock is backordered. The EOQ is used to establish the value. A service level of 0.95 (demand satisfied without backorder) is desired. The item's de mand is somewhat difficult to predict and two forecast- ing procedures are possible. System A (complex) B (simple) Cost to Operate per Year ($/yr.) 200 (units) 1000 2300 35 PROBLEMS Which forecasting system should be used? Discuss. Note: Forecast errors can be assumed to be normally distributed with zero bias for both models. 7.24 Consider an item under (s, l) control. Basic item information is as follows: D = 40,000 units/year; A - $20; r = 0.25 $/$/yr; v = $1.60/unit. All demand when out of stock is backordered. The EOQ is used to establish the value. A service level of 0.95 (demand satisfied without backorder) is desired. The item's de mand is somewhat difficult to predict and two forecast- ing procedures are possible. System A (complex) B (simple) Cost to Operate per Year ($/yr.) 200 (units) 1000 2300 35 PROBLEMS Which forecasting system should be used? Discuss. Note: Forecast errors can be assumed to be normally distributed with zero bias for both models. 7.24 Consider an item under (s, l) control. Basic item information is as follows: D = 40,000 units/year; A - $20; r = 0.25 $/$/yr; v = $1.60/unit. All demand when out of stock is backordered. The EOQ is used to establish the value. A service level of 0.95 (demand satisfied without backorder) is desired. The item's de mand is somewhat difficult to predict and two forecast- ing procedures are possible. System A (complex) B (simple) Cost to Operate per Year ($/yr.) 200 (units) 1000 2300 35 PROBLEMS Which forecasting system should be used? Discuss. Note: Forecast errors can be assumed to be normally distributed with zero bias for both models. 7.24 Consider an item under (s, l) control. Basic item information is as follows: D = 40,000 units/year; A - $20; r = 0.25 $/$/yr; v = $1.60/unit. All demand when out of stock is backordered. The EOQ is used to establish the value. A service level of 0.95 (demand satisfied without backorder) is desired. The item's de mand is somewhat difficult to predict and two forecast- ing procedures are possible. System A (complex) B (simple) Cost to Operate per Year ($/yr.) 200 (units) 1000 2300 35 PROBLEMS Which forecasting system should be used? Discuss. Note: Forecast errors can be assumed to be normally distributed with zero bias for both models. 7.24 Consider an item under (s, l) control. Basic item information is as follows: D = 40,000 units/year; A - $20; r = 0.25 $/$/yr; v = $1.60/unit. All demand when out of stock is backordered. The EOQ is used to establish the value. A service level of 0.95 (demand satisfied without backorder) is desired. The item's de mand is somewhat difficult to predict and two forecast- ing procedures are possible. System A (complex) B (simple) Cost to Operate per Year ($/yr.) 200 (units) 1000 2300 35 PROBLEMS Which forecasting system should be used? Discuss. Note: Forecast errors can be assumed to be normally distributed with zero bias for both models. 7.24 Consider an item under (s, l) control. Basic item information is as follows: D = 40,000 units/year; A - $20; r = 0.25 $/$/yr; v = $1.60/unit. All demand when out of stock is backordered. The EOQ is used to establish the value. A service level of 0.95 (demand satisfied without backorder) is desired. The item's de mand is somewhat difficult to predict and two forecast- ing procedures are possible. System A (complex) B (simple) Cost to Operate per Year ($/yr.) 200 (units) 1000 2300 35 PROBLEMS Which forecasting system should be used? Discuss. Note: Forecast errors can be assumed to be normally distributed with zero bias for both models. 7.24 Consider an item under (s, l) control. Basic item information is as follows: D = 40,000 units/year; A - $20; r = 0.25 $/$/yr; v = $1.60/unit. All demand when out of stock is backordered. The EOQ is used to establish the value. A service level of 0.95 (demand satisfied without backorder) is desired. The item's de mand is somewhat difficult to predict and two forecast- ing procedures are possible. System A (complex) B (simple) Cost to Operate per Year ($/yr.) 200 (units) 1000 2300 35 PROBLEMS Which forecasting system should be used? Discuss. Note: Forecast errors can be assumed to be normally distributed with zero bias for both models. 7.24 Consider an item under (s, l) control. Basic item information is as follows: D = 40,000 units/year; A - $20; r = 0.25 $/$/yr; v = $1.60/unit. All demand when out of stock is backordered. The EOQ is used to establish the value. A service level of 0.95 (demand satisfied without backorder) is desired. The item's de mand is somewhat difficult to predict and two forecast- ing procedures are possible. System A (complex) B (simple) Cost to Operate per Year ($/yr.) 200 (units) 1000 2300 35 PROBLEMS Which forecasting system should be used? Discuss. Note: Forecast errors can be assumed to be normally distributed with zero bias for both models