5. A distributor stocks electronic parts in a warehouse for shipment to various contract manufacturers. One...

 

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5. A distributor stocks electronic parts in a warehouse for shipment to various contract manufacturers. One specialized power supply costs $100 per unit and can only be purchased from the supplier in boxes of 24 with a lead time of 2 weeks. The distributor sells an average of 10 units per week with a standard deviation of 3 units. Because of the risk of obsolescence. the distributor uses an annual holding cost rate of 25 percent. a. If we use a continuous review ROP model and set the backorder cost to b = $25 per year, what reorder point would the approximate model in this chapter set? b. If the order quantity, OQ, were equal to 1. what service level (fill rate) would result from the reorder point of part (a)? c. Because the order quantity is forced by the supplier to be 24, will the actual service level be higher or lower than that in part (b)? How might the distributor select an appropriate reorder point that considers the order quantity of 24? 5. A distributor stocks electronic parts in a warehouse for shipment to various contract manufacturers. One specialized power supply costs $100 per unit and can only be purchased from the supplier in boxes of 24 with a lead time of 2 weeks. The distributor sells an average of 10 units per week with a standard deviation of 3 units. Because of the risk of obsolescence. the distributor uses an annual holding cost rate of 25 percent. a. If we use a continuous review ROP model and set the backorder cost to b = $25 per year, what reorder point would the approximate model in this chapter set? b. If the order quantity, OQ, were equal to 1. what service level (fill rate) would result from the reorder point of part (a)? c. Because the order quantity is forced by the supplier to be 24, will the actual service level be higher or lower than that in part (b)? How might the distributor select an appropriate reorder point that considers the order quantity of 24?

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a If we use a continuous review ROP model and set the backorder cost to b 25 pe... View the full answer