Question: Solve in excel Bell computers purchases IC chips from a supplier at $350/chip. The holding cost has been estimated to be 10% of purchase price.

Solve in excel

Bell computers purchases IC chips from a supplier at $350/chip. The holding cost has been estimated to be 10% of purchase price. It has estimated that Bell will need 4800 chips per year. Bell operates 250 day per year. The company wants to maintain a service level of 95%.

Data from supplier:

The cost of placing an order is $120/order. The supplier promises an average lead time of ten days with a standard deviation of 2.5 days. Based on past Bell has estimated that daily demand during lead time is normally distributed with a mean of 19.2 and a standard deviation of 4.5. The supplier has promised the following discount schedule if Bell orders larger quantities:

Vendor 1
Quantity	Discount
1-599	0%
600-1199	1%
1200+	2.5%

What is the order quantity?
What is the safety stock?
What is the reorder point?
What is the total cost including cost of purchasing the parts?

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