Ollah's Organic Pet Shop sells bags of cedar chips for pet bedding or snacking (buyers choice). The supplier has offered the following terms: Order 1-100 bags, and the price is $6.00 a bag. Order 101 or more and the price is $4.50 a bag. Annual demand is 630, fixed ordering costs are $9 per order, and the per bag holding cost is estimated to be around $2 per year. Suppose the lead time for bags is a consistant 2 weeks, and the average weekly demand is 12.6 bags, with a standard deviation of 3.2 bags. If Ollah wants to maintain a 98% service level, what should her reorder point be?

Ollah's Organic Pet Shop sells bags of cedar chips for pet bedding or snacking (buyers choice). The supplier has offered the following terms: Order 1-100 bags, and the price is $6.00 a bag. Order 101 or more and the price is $4.50 a bag. Annual demand is 630, fixed ordering costs are $9 per order, and the per bag holding cost is estimated to be around $2 per year. Suppose the lead time for bags is a consistant 2 weeks, and the average weekly demand is 12.6 bags, with a standard deviation of 3.2 bags. If Ollah wants to maintain a 98% service level, what should her reorder point be?

Name: Ollah's Organic Pet Shop sells bags of cedar chips for pet bedding or
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Description: Ollah's Organic Pet Shop sells bags of cedar chips for pet bedding or snacking (buyers choice). The supplier has offered the following terms:Order 1-100 bags, and the price is $6.00 a bag.Order 101 or more and the price is $4.50 a bag.Annual demand i

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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