Problem 2 Sundance Office Mfrg (SOM) uses a certain type of ergonomically adjusted chair support for...

 

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Problem 2 Sundance Office Mfrg (SOM) uses a certain type of ergonomically adjusted chair support for its manufacturing operations in Denver, CO . Sundance purchases these chair supports from a supplier in Juarez, Mexico at a cost of $40 per unit. The lead time to receive orders from Mexico is fairly constant at 5 days. The cost to place an order is $290. The annual holding cost rate is estimated at 20% of the unit cost of the item. The weekly demand for those supports exhibits some variability that can be properly modeled by a Normal probability distribution, with an average of 2,000 units per 5 days, and a 5-day standard deviation of 120 units. Because demand is probabilistic, SOM has decided to establish a protection level of 96.5% of not having shortages. The manufacturing plant operates 300 days per year. a. What is the reorder point, in units? b. How many units need to be kept as 'safety stock' because of the variable nature of demand? c. What is the optimal order quantity and how often, on average, orders need to be placed, in working days? Problem 2 Sundance Office Mfrg (SOM) uses a certain type of ergonomically adjusted chair support for its manufacturing operations in Denver, CO . Sundance purchases these chair supports from a supplier in Juarez, Mexico at a cost of $40 per unit. The lead time to receive orders from Mexico is fairly constant at 5 days. The cost to place an order is $290. The annual holding cost rate is estimated at 20% of the unit cost of the item. The weekly demand for those supports exhibits some variability that can be properly modeled by a Normal probability distribution, with an average of 2,000 units per 5 days, and a 5-day standard deviation of 120 units. Because demand is probabilistic, SOM has decided to establish a protection level of 96.5% of not having shortages. The manufacturing plant operates 300 days per year. a. What is the reorder point, in units? b. How many units need to be kept as 'safety stock' because of the variable nature of demand? c. What is the optimal order quantity and how often, on average, orders need to be placed, in working days?

Answer rating: 100% (QA)

a Step 12 The daily average demand Five days demandtotal days in a week 2000 5 400 Given the lead ti... View the full answer