Question: Safty Circuits Inc. stocks and sells small electronics products using an (R, S) type of control system. A manager reviews the stock monthly. The supplier
Safty Circuits Inc. stocks and sells small electronics products using an (R, S) type of control system. A manager reviews the stock monthly. The supplier delivers at their location following a lead time of 10 days. Inventory carrying charge is 0.12 $/$/year. The manager has observed that demand for the XRL line is as follows:
| Item (i) | Demand (Di) (Packs/year) | σi,1 (Packs) |
| XLR-1 | 1200 | 35 |
| XLR-2 | 350 | 50 |
| XLR-3 | 700 | 40 |
where σi,1 is the standard deviation of yearly demand for item i. Suppose that a TSS of $1,200 is to be allocated among the three items. Consider the following service measures:
1. Same k for the 3 items
2. Same P1 for the 3 items
3. Same TBS for the 3 items
4. Same B1 for the 3 items
5. Same B2 for the 3 items
For each, determine:
a. How the $1,200 is allocated among the three items?
b. ETSOPY (expected total #stock-outs per year)
c. ETVSPY (expected total value short per year)
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a 1 The same k for the 3 items 1200 is allocated equally among the three ... View full answer
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