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PROBLEM 4!!!

PROBLEM-3. (20 pts) A company is using a lot size-reorder point system to control the replenishment of a particular XYZ product . The store sells an average of 30 XYZ product each week. Weekly demand follows a normal distribution with variance 20. The store pays TL20 for each XYZ product, which it sells for TL60. Fixed costs of replenishment amount to TL70. The accounting department recommends a 15 percent interest rate for the cost of capital. Storage costs amount to 7 percent and breakage to 3 percent of the value of each item. If a customer demands the XYZ product when it is out of stock, the customer will generally go elsewhere. Loss-of-goodwill costs are estimated to be about TL40 per XYZ product. Replenishment lead time is two months. a. If lot sizes are based on the EOQ formula, what reorder level should be used for XYZ products? (5 Pts) b. Find the optimal values of (Q, R) (15 Pts) PROBLEM-4. (25 Pts) a. Re-solve the problem faced by the department store mentioned in 3" problem, replacing the stock-out cost with a "90 percent Type 1 service level" (10 Pts) b. Re-solve the problem faced by the department store mentioned in 3" problem, replacing the stock-out cost with a "90 percent Type 2 service level". What is the imputed shortage cost? (15 Pts) PROBLEM-3. (20 pts) A company is using a lot size-reorder point system to control the replenishment of a particular XYZ product . The store sells an average of 30 XYZ product each week. Weekly demand follows a normal distribution with variance 20. The store pays TL20 for each XYZ product, which it sells for TL60. Fixed costs of replenishment amount to TL70. The accounting department recommends a 15 percent interest rate for the cost of capital. Storage costs amount to 7 percent and breakage to 3 percent of the value of each item. If a customer demands the XYZ product when it is out of stock, the customer will generally go elsewhere. Loss-of-goodwill costs are estimated to be about TL40 per XYZ product. Replenishment lead time is two months. a. If lot sizes are based on the EOQ formula, what reorder level should be used for XYZ products? (5 Pts) b. Find the optimal values of (Q, R) (15 Pts) PROBLEM-4. (25 Pts) a. Re-solve the problem faced by the department store mentioned in 3" problem, replacing the stock-out cost with a "90 percent Type 1 service level" (10 Pts) b. Re-solve the problem faced by the department store mentioned in 3" problem, replacing the stock-out cost with a "90 percent Type 2 service level". What is the imputed shortage cost? (15 Pts)