An automotive warehouse stocks a variety of parts that are sold at neighborhood stores. One particular part, a popular brand of oil filter, is purchased by the warehouse for $1.50 each. It is estimated that the cost of order processing and receipt is $100 per order. The company uses an inventory carrying charge based on a 25 percent annual interest rate. The monthly demand for the filter follows a normal distribution with mean 300 and standard deviation 80. Order lead time is assumed to be five months. Assume that if a filter is demanded when the warehouse is out of stock, then the demand is back-ordered, and the cost assessed for each back- ordered demand is $12.80.

An automotive warehouse stocks a variety of parts that are sold at neighborhood stores. One particular part, a popular brand of oil filter, is purchased by the warehouse for $1.50 each. It is estimated that the cost of order processing and receipt is $100 per order. The company uses an inventory carrying charge based on a 25 percent annual interest rate. The monthly demand for the filter follows a normal distribution with mean 300 and standard deviation 80. Order lead time is assumed to be five months. Assume that if a filter is demanded when the warehouse is out of stock, then the demand is back-ordered, and the cost assessed for each back- ordered demand is $12.80.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter10: Introduction To Simulation Modeling

Section10.5: Introduction To @risk

Problem 20P: Use @RISK to analyze the sweatshirt situation in Problem 14 of the previous section. Do this for the...

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