(a) How do you relate stock-out risk with safety stock and quantity in stock? (b) A company uses an average of 216 circuit boards a day with a standard deviation of 16 board per day in a manufacturing process. The cost of placing and receiving an ordering is BDT 40,000. The estimated monthly carrying cost is BDT 90 per circuit board. Orders are delivered approximately 5 days after being placed. The delivery time is normal with a mean of 5 days and a standard deviation of 1 day. The company is open 360 days per year. i. Find the order quantity that is economical. ii. If the Company takes 5% stock out risk, then find safety stock (SS) quantity and Re-Order Point? iii. If the supplier offers a discount of BDT 8 per circuit board for purchasing 4000 boards at a time, then financially evaluate and justify whether the company will go with the offer or not? iv. The person who orders the boards follows this rule: Order when the amount on hand drops to 1700 boards. What is the probability that the supply of circuit boards will be exhausted before receiving order if boards are reordered when the amount on hand drops to 1700 boards?
(a) How do you relate stock-out risk with safety stock and quantity in stock?
(b) A company uses an average of 216 circuit boards a day with a standard deviation of 16 board per day in a manufacturing process. The cost of placing and receiving an ordering is BDT 40,000. The estimated monthly carrying cost is BDT 90 per circuit board. Orders are delivered approximately 5 days after being placed. The delivery time is normal with a mean of 5 days and a standard deviation of 1 day. The company is open 360 days per year.
i. Find the order quantity that is economical.
ii. If the Company takes 5% stock out risk, then find safety stock (SS) quantity and Re-Order Point?
iii. If the supplier offers a discount of BDT 8 per circuit board for purchasing 4000 boards at a time, then financially evaluate and justify whether the company will go with the offer or not?
iv. The person who orders the boards follows this rule: Order when the amount on hand drops to 1700 boards. What is the probability that the supply of circuit boards will be exhausted before receiving order if boards are reordered when the amount on hand drops to 1700 boards?
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