Kabel Market store sells electric cable. The demand for cable is normally distributed. The inventory related information at Kabel Market is as follows: Average Annual Demand = 16,900 metersStandard deviation of weekly demand = 28 metersCable selling price = AMD 640.00 per meter Ordering cost = AMD 1,250.00 per orderLead time = 5 weeksAnnual inventory-holding cost estimate = 2.5% of the cable selling priceRequired service level = 95%Kabel Market works 52 weeks a year. Note: The approximate z values are: for 0.9 ≈ 1.28, for 0.92 ≈ 1.405, for 0.95 ≈ 1.645, for 0.98 ≈ 2.05. Suppose the bar management practices the fixed-QUANTITY ordering system with the use of the economic order quantity. Answer the following questions:(i) How many meters of cable they order from the supplier each time?(ii) When do they place an order?(iii) What is the safety stock?

Annual Demand = D = 16,900 meters No. of weeks per year = 52 weeks Weekly Demand = d = D / No. of…

Answered: Kabel Market store sells electric…

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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Kabel Market store sells electric cable. The demand for cable is normally distributed. The inventory related information at Kabel Market is as follows:

Average Annual Demand = 16,900 meters
Standard deviation of weekly demand = 28 meters
Cable selling price = AMD 640.00 per meter
Ordering cost = AMD 1,250.00 per order
Lead time = 5 weeks
Annual inventory-holding cost estimate = 2.5% of the cable selling price
Required service level = 95%
Kabel Market works 52 weeks a year.

Note: The approximate z values are: for 0.9 ≈ 1.28, for 0.92 ≈ 1.405, for 0.95 ≈ 1.645, for 0.98 ≈ 2.05.

Suppose the bar management practices the fixed-QUANTITY ordering system with the use of the economic order quantity. Answer the following questions:

(i) How many meters of cable they order from the supplier each time?

(ii) When do they place an order?

(iii) What is the safety stock?

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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