Question 10.6 Storage Limited operates a 50-week working year. It produces a product called 'GENERAL' for which demand any week in the year is described by the probability distribution below: 5 6 7 3 4 Probability 0.07 0.10 0.11 0.13 0.15 0.17 0.13 0.08 0.04 0.02 Demand Demand can only be satisfied (if at all) from stocks. The stockholding costs are 4 per item per year. Fixed costs per re-order are NI6 and the variable, re-order costs are N30 per unit Lead time is one week. The costs of being out of stock are N12 per unit short. You are required to calculate: (i) The average weekly demand; [iii) The Economic Order Quantity3B [iv] The number of ordering cycles in the year; and [v] State briefly the main reason for holding inventory, and explain why good inventory management is a very important aspect of overall company management. [ii The average annual demand;

Question 10.6 Storage Limited operates a 50-week working year. It produces a product called 'GENERAL' for which demand any week in the year is described by the probability distribution below: 5 6 7 3 4 Probability 0.07 0.10 0.11 0.13 0.15 0.17 0.13 0.08 0.04 0.02 Demand Demand can only be satisfied (if at all) from stocks. The stockholding costs are 4 per item per year. Fixed costs per re-order are NI6 and the variable, re-order costs are N30 per unit Lead time is one week. The costs of being out of stock are N12 per unit short. You are required to calculate: (i) The average weekly demand; [iii) The Economic Order Quantity3B [iv] The number of ordering cycles in the year; and [v] State briefly the main reason for holding inventory, and explain why good inventory management is a very important aspect of overall company management. [ii The average annual demand;

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter7: Nonlinear Optimization Models

Section: Chapter Questions

Problem 56P

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