Question: Consider an SKU with expected demand = 100 per week and variance of demand 2 = 300. Assume that the weekly demand is normally distributed.

Consider an SKU with expected demand = 100 per week and variance of demand 2 = 300. Assume that the weekly demand is normally distributed. The replenishment lead time for this SKU is always 4 weeks. Inventory of this SKU is controlled by a continuous review (s, Q) policy.

a. What is the required reorder point that provides a non-stock-out probability of 95%?

b. Now suppose the firm actually reduces the lead time by working with its supplier. Unfortunately, the reduced lead time is not always achieved. In particular, the lead time is 2 weeks for half of the time and 4 weeks for half of the time. What is the required reorder point that provides a non-stock-out probability of 95%?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!

Consider an SKU with expected demand D=100 per week and variance of demand D2=300. Assume that the weekly demand is normally distributed. The replenishment lead time for this SKU is always 4 weeks....

Suppose that the demand for a company's product in weeks 1, 2, and 3 are each normally distributed and the mean demand during each of these three weeks is 50, 45, and 65, respectively. Suppose the...

Ul Lyudi 10 225 pounds. d. more than 225 pounds. 2. Using the data regarding the inventory management of a stock-keeping unit shown in the following table, it can be concluded that the optimal...

Bulloch County Hospital consumes, on average, 1 , 0 0 0 boxes of bandages per week. The hospital operates 5 2 weeks per year. Demand is normally distributed, with a standard deviation of weekly...

please help. thank you Tradeoffs When Aggregating Inventory EXAMPLE 14-3 HighMed, a manufacturer of medical equipment used in heart procedures, is located in Madison, Wisconsin, and cardiologists use...

iv. Anokye's company can produce a part it uses in an assembly operation at the rate of 50 an hour. The company operates eight hours a day, 300 days a year. Daily usage of the part is 300 parts. The...

Problem 5. Text-On-Line, an online bookseller, is located in Miami, Florida, and its books are ordered by students all over North America. Text-On-Line currently divides the United States into six...

Procter \& Gamble, the maker of Puffs tlssues, traditionally sells these tissues for $9.00 per case, where a case contains eight boxes. A retaller's average weekly demand is 36 cases of a particular...

$9.40 per case, where a case contai 25 cases of a particular Puffs SKU (color, scent, etc.). P&G has decided to change its pr ing strategy by offering two different plans. With one plan, the retailer...

Q4 - Safety inventory with continuous review policy and CSL Koffeesrus imports Kopi Luwak coffee from Indonesia. Weekly demand of Kopi Luwak coffee is normally and independently distributed with a...

Solve the linear programming model formulation in Problem 41 for Island Publishing Company graphically. a. Determine the sensitivity range for the advertising revenue generated by the real estate...

A monochromatic source emitting radiation with a certain frequency moves with a velocity v away from a stationary observer A. It is moving towards another observer B (also at rest) along a line...

mployee can authorize an employer to deduct certain witholding from their pay on a pretax basis. When taien from gross pay, the amount of wapes subject to FIT is reduced. Examples include: . or...

Create a C# application named SalesTransactionDemo that declares several SalesTransaction objects and displays their values and their sum. The SalesTransaction class contains the following fields:...