1252 Words6 Pages
Seoul National University

Supply Chain Management

May 11 – May 22, 2015

Homework Assignment
Completed assignment is due at the start of Session 7 on Tuesday, May 19.
This assignment is to be completed in a group of 2 or 3 students. Submit a hard copy, not an electronic copy (typed answers are preferred). Show your work clearly and explain your reasoning in detail. You will not receive a credit if the instructor cannot understand what you have done because of insufficient explanation.

(Q1-Q2) Teddy Bower the Newsvendor
(To answer these two questions, use the Standard Normal Distribution Function Table; one of the purposes of these questions is to give you a hands-on experience in using the table, which you will need to do in the final
There is no correlation between past, present, and future demands.
2

AU
4208.0
2204.6

AY
306.8
103.1

Seoul National University

Supply Chain Management

May 11 – May 22, 2015

Monthly demand for each option is normally distributed with the mean and standard deviation indicated above. Demands are independent across time.
There are 4.33 weeks in a month.
The unit cost of each printer is \$300, regardless of the option.
The annual cost of holding a unit of inventory is 24% of the item cost (\$300).

8. (Ocean shipping scenario) The current practice is to ship all printers by ocean, which costs
HP \$10 per printer. The ocean-shipping delivery lead time from Vancouver to Europe DC is
5 weeks, including the time it takes to clear the custom. Suppose that the management goal is to minimize the expected cost of holding safety stock and pipeline inventories while achieving the in-stock probability target of 95%. For each of the six Europe options, calculate (i) the expected annual cost of holding safety stock and pipeline inventories and (ii) the expected annual cost of shipping. Follow the calculation steps discussed in class, including the use of Excel function NORMSINV. What is the total annual inventory cost of