Question 1: A company begins a review of ordering policies for its continuous review system by checking the current policies for a sample of SKUs. Following are the characteristics of one item. Demand = x1 units/week Assume 52 weeks per year. Ordering and setup cost S = $50/order Holding cost H = $13/unit/year Lead time L = x2 weeks Standard deviation of weekly demand = 12 units Cycle service level = 88 percent a. What is the EOQ for this item? b. What is the desired safety stock? c. What is the reorder point? d. What are the cost implications if the current policy for this item is Q = 200 and R = 800?

Question 1: A company begins a review of ordering policies for its continuous review system by checking the current policies for a sample of SKUs. Following are the characteristics of one item. Demand = x1 units/week Assume 52 weeks per year. Ordering and setup cost S = $50/order Holding cost H = $13/unit/year Lead time L = x2 weeks Standard deviation of weekly demand = 12 units Cycle service level = 88 percent a. What is the EOQ for this item? b. What is the desired safety stock? c. What is the reorder point? d. What are the cost implications if the current policy for this item is Q = 200 and R = 800?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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