Question: The demand for a product is normally distributed, but all of the other EOQ assumptions are met. The annual demand is 10,000 units, and there

The demand for a product is normally distributed, but all of the other EOQ assumptions are met. The annual demand is 10,000 units, and there are 250 working days per year. The ordering cost is $48 per order and the holding cost is $6 per unit per year. Sales during the 6-day lead time are normally distributed with a mean of 240 units and a standard deviation of 80 units. A service level of 90% has been established based on holding costs and stockout costs.

(a) How many units should be ordered to minimize cost?

(b) How much safety stock should be carried?

Step by Step Solution

★★★★★

3.37 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a b Safety stock z 12880 984 c ROP 240 984 ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

162-M-S-I-C-M (63).docx

120 KBs Word File

Students Have Also Explored These Related Statistics Questions!

Demand for a product is inelastic. Which is not consistent with this? a. It is difficult to substitute the product with another one. b. The product can easily be substituted by another. c....

Based upon Table 10-2, how many observations should be taken on an operation whose annual activity is 750 pieces and whose cycle time is estimated at 15 minutes?

How many factors should be extracted in problem I? Explain your reasoning.

The demand for a product is normally distributed, but all of the other EOQ assumptions are met. The annual demand is 10,000 units, and there are 250 working days per year. The ordering cost is $48...

i need help on question 37 and 38 i am not sure if my answers are correct Average daily demand for a product is normally distributed with a mean of 8 units and a standard deviation of 7 units. Lead...

a. Average daily demand for a product is normally distributed with a mean of 6 units and a standard deviation of 2 units. Lead time is fixed at four days. What is the reorder point if there is no...

Average daily demand for a product is normally distributed with a mean of 6 units and a standard deviation of 1 units. Lead time is fixed at four days. What is the reorder point if there is no safety...

Average daily demand for a product is normally distributed with a mean of 5 units and a standard deviation of 10 units. Lead time is fixed at 4 days. What is the reorder point if service level is 80%...

For the second part of the Exam, develop an Excel spreadsheet with clearly marked sections to answer each of the following questions using the appropriate formula's, and submit your spreadsheet...

Belsize Plc has outstanding debt for 150M, due next year, and assets of 150M, including 50M of cash and 100M in accounts receivables due next year as part of a government contract. Belsize has an...

Your friend Janesh is always boasting about how well he's done in crypto. He claims to have made $ 1 3 , 5 0 0 profit on Bitcoin in the last the value of Bitcoin has increased by 1 8 % in the last 6...

For financial statement purposes, the installment method of accounting may be used if the a. Collection period extends over more than twelve months. b. Installments are due in different years. c....

= 2-45 Cars arrive at Carlas Muffler shop for repair work at an average of 3 per hour, following an exponential distribution.

=2-44 Using the data in Problem 2-43, determine the probability of more than 3 visits for emergency room service on any given day.

= 2-31 What are the expected value and variance of the following probability distribution? RANDOM VARIABLE X PROBABILITY 1 0.05 2 0.05 3 0.10 4 0.10 5 0.15 6 0.15 7 0.25 8 0.15

Assume today is December 31, 2013. Imagine Works Inc. just paid a dividend of $1.25 per share at the end of 2013. The dividend is expected to grow at 18% per year for 3 years, after which time it is...

Baker Corp. has a value of $20 million. Tucci is otherwise identical to Baker Corp., but has $8 million in debt. Suppose that both firms are growing at a rate of 6%, the corporate tax rate is 35%,...

Can anyone explain to me how to get the NPV for this problem? I need to plug it into excel so if you could tell me how to do that as well, it would be greatly appreciated. Thanks! DATA Coxt of plant...