Cranium, Inc., purchases term papers from an overseas supplier under a continuous review system. The average demand for a popular mode is 300 units a day with a standard deviation of 30 units a day. It costs $60 to process each order and there is a five-day lead-time. The holding cost for a paper is $0.25 per year and the company policy is to maintain a 98% service level. Cranium operates 200 days per year. A normal distribution table is append-: this exam. a) Determine the reorder point R to satisfy a 98% cycle-service level. b) What service level does a reorder point of 1,524 imply? c) If lead-time increases by three days, what is the reorder point needed to maintain a 98% service level? d) What is the cost of holding the safety stock necessary to maintain the 98% service level?

Cranium, Inc., purchases term papers from an overseas supplier under a continuous review system. The average demand for a popular mode is 300 units a day with a standard deviation of 30 units a day. It costs $60 to process each order and there is a five-day lead-time. The holding cost for a paper is $0.25 per year and the company policy is to maintain a 98% service level. Cranium operates 200 days per year. A normal distribution table is append-: this exam. a) Determine the reorder point R to satisfy a 98% cycle-service level. b) What service level does a reorder point of 1,524 imply? c) If lead-time increases by three days, what is the reorder point needed to maintain a 98% service level? d) What is the cost of holding the safety stock necessary to maintain the 98% service level?

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Description: Cranium, Inc., purchases term papers from an overseas supplier under a continuous reviewsystem. The average demand for a popular mode is 300 units a day with a standard deviationof 30 units a day. It costs $60 to process each order and there is a fi

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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