Question: Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost Order cost Annual holding cost (%)

Given the following information, formulate an

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost Order cost Annual holding cost (%) Annual demand Average demand $ 11.00 $257.00 33 26,600 532 Standard deviation of weekly demand Lead time Service probability 30 units 2 week 98% I order % of item cost units /week a. Determine the order quantity and reorder point. (Use Excel's NORMSINV() function to find your z-value and then round that z- value to 2 decimal places. Do not round any other intermediate calculations. Round your final answers to the nearest whole number.) Optimal order quantity Reorder point units units b. Determine the annual holding and order costs. (Do not round any intermediate calculations. Round your final answers to 2 decimal places.) Holding cost Ordering cost b. Determine the annual holding and order costs. (Do not round any intermediate calculations. Round your final answers to 2 decimal places.) Holding cost Ordering cost c. Assume a price break of $60 per order was offered for purchase quantities of 2,000 units per order. If you took advantage of this price break, how much would you save annually? (Do not round any intermediate calculations (including number of setups per year). Round your final answer to 2 decimal places.) Annual savings The annual demand for a product is 14,800 units. The weekly demand is 285 units with a standard deviation of 95 units. The cost to place an order is $31.00, and the time from ordering to receipt is two weeks. The annual inventory carrying cost is $0.20 per unit. a. Find the reorder point necessary to provide a 90 percent service probability. (Use Excel's NORMSINV() function to find the correct critical value for the given a-level. Round "z" value to 2 decimal places.) Reorder point b. Suppose the production manager is asked to reduce the safety stock of this item by 55 percent. If she does so, what will the new service probability be? (Use Excel's NORMSDIST() function to find the correct probability for your computed Z-value. Round "z" value to 2 decimal places and final answer to 1 decimal place.) Service probability %

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!

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost Order cost Annual holding cost (%) Annual demand Average demand $10.00...

Problem 11-15 Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $ 7.00 Standard deviation of weekly demand 20 per week Order...

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $ 7.00 Standard deviation of weekly demand 25 per week Order cost $ 210.00...

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $ 10.00 Standard deviation of weekly demand 20 units Order cost $ 207.00...

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $10.00 Standard deviation of Order cost $250.00 weekly demand 25 per week...

Given the following information, formulate an inventory management system. The item is demanded 5 0 weeks a year.PARAMETERVALUEItem cost$ 8 . 0 0 Order cost$ 1 8 3 . 0 0 per orderAnnual holding cost...

Problem 11-15 (Algo) 21 B Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year TARARETE VALU TANAHTER VALITE Item coat 08.00 Standard...

Given the following information, formulate an inventory management system. The item is demanded 5 0 weeks a year.PARAMETERVALUEItem cost$ 9 . 0 0 Order cost$ 1 9 7 . 0 0 per orderAnnual holding cost...

Suppose (a,)neN is a sequence in R. Show that lim sup a, = max { lim sup a2k, lim sup a2k-1 kx k

Suppose SCR (S is a proper subset of R) is bounded above and nonempty. If sup S is not an element of S then use a direct argument using the "approximation of the sup" to show that S is infinite....

6 Name the eight computer terms being described below (a different answer is required for all eight parts). a) A user is granted access to a website only after successfully presenting two pieces of...

As the manager of Smith Construction, you need to make a decision on the number of homes to build in a new residential area where you are the only builder. Unfortunately, you must build the homes...