A company specialized in manufacturing and servicing hydraulic hammers operates 260 days a year. The company...
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A company specialized in manufacturing and servicing hydraulic hammers operates 260 days a year. The company needs an average of 35 chisels (50mm) a day for production, sales, and service requirements. The demand for chisels can be assumed to be distributed normally, with a standard deviation of 8 chisels a day. The local supplier takes 8 days to supply the chisels once an order is placed. The ordering cost per order is $250 per order. The annual holding cost per chisel is $6. (a) Estimate the economic order quantity (EOQ) for the chisels. (b) Assume that management has specified 96% service level achievement. Estimate the reorder point (ROP) required to maintain the specified service level. (c) What is the safety stock needed to achieve 96% service level? (d) What is the annual holding cost? A company specialized in manufacturing and servicing hydraulic hammers operates 260 days a year. The company needs an average of 35 chisels (50mm) a day for production, sales, and service requirements. The demand for chisels can be assumed to be distributed normally, with a standard deviation of 8 chisels a day. The local supplier takes 8 days to supply the chisels once an order is placed. The ordering cost per order is $250 per order. The annual holding cost per chisel is $6. (a) Estimate the economic order quantity (EOQ) for the chisels. (b) Assume that management has specified 96% service level achievement. Estimate the reorder point (ROP) required to maintain the specified service level. (c) What is the safety stock needed to achieve 96% service level? (d) What is the annual holding cost?
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Answer rating: 100% (QA)
a The Economic Order Quantity EOQ can be calculated using the formula EOQ sqrt2DSH where D is the an... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
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