Question: Weekly demand for a certain product is normally distributed with a mean of 200 and a standard deviation of 10. The source of supply is

Weekly demand for a certain product is normally distributed with a mean of 200 and a standard deviation of 10. The source of supply is reliable and maintains a constant lead time of 1 week. The cost of placing an order is $10 and the annual holding cost is $3 per unit. Assume 52 weeks per year. Management wants to satisfy a 95% probability of not running out of stock in any one order cycle. 1. What is the average demand during lead-time? 2. What is the standard deviation of demand during lead-time? 3. What should be the safety stock? 4. What should be the reorder point? 5. What should be the order quantity? 6. State the ordering policy by using one sentence.

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!