The demand for a product of Carolina Industries varies greatly from month to month. Based on the past three years of data, the following shows the monthly demand at Carolina Industries. Unit Demand # Months 300 6 400 8 500 12 600 10 A.If the company places monthly orders equal to the expected value of the monthly demand, what should Carolina’s monthly order quantity be for this product? B. What are the variance and the standard deviation for the number of units demanded?

The demand for a product of Carolina Industries varies greatly from month to month. Based on the past three years of data, the following shows the monthly demand at Carolina Industries. Unit Demand # Months 300 6 400 8 500 12 600 10 A.If the company places monthly orders equal to the expected value of the monthly demand, what should Carolina’s monthly order quantity be for this product? B. What are the variance and the standard deviation for the number of units demanded?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter10: Introduction To Simulation Modeling

Section10.4: Simulation With Built-in Excel Tools

Problem 14P

See similar textbooks

Similar questions

3. Cynthia Knott’s oyster bar buys fresh Louisiana oysters for $5 per pound and sells them for $12 per pound. Any oysters not sold that day are sold to her cousin, who has a nearby grocery store, for $1 per pound. Cynthia believes that demand follows the normal distribution, with a mean of 100 pounds and a standard deviation of 15 pounds. a) What is the cost of underestimating demand for each pound? b) What is the overage cost per pound? c) How many pounds of oyster should she order each day? d) What is the stockout risk for this order size?
Forrest and Dan make boxes of chocolates for which the demand is uncertain. Forrest says, “That’s life.” On the other hand, Dan believes that some demand patterns exist that could be useful for planning the purchase of sugar, chocolate, and shrimp. Forrest insists on placing a surprise chocolatecovered shrimp in some boxes so that “You never know what you’ll get.” Quarterly demand (in boxes of chocolates) for the last 3 years follows: Quarter Year 1 Year 2 Year 3 1 2 3 4 3,000 1,700 900 4,400 3,300 2,100 1,500 5,100 3,502 2,448 1,768 5,882 Total 10,000 12,000 13,600 a. Use intuition and judgment to estimate quarterly demand for the fourth year.b. If the expected sales for chocolates are 14,800 cases for year 4, use the multiplicative seasonal method to prepare a forecast for each quarter of the year. Are any of the quarterly forecasts different from what you thought you would get in part (a)?
13 Pam’s demand for hats is normally distributed with mean 500 and standard deviation 100. She sells her hats for $50 each and buys hats for $10 each, and anything she can't sell by the end of the year, the wholesaler will buy for $5 each. How many hats should she order for next year to maximize profit?
A distributor of large appliances needs to determine the order quantities and reorderpoints for the various products it carries. The following data refer to a specii c refrigeratorin its product line:Cost to place an orderHolding costCost of refrigeratorAnnual demandStandard deviation of demand during lead timeLead time$10020 percent of product cost per year$500 each500 refrigerators10 refrigerators7 daysConsider an even daily demand and a 365-day year.a. What is the economic order quantity?b. If the distributor wants a 97 percent service probability, what reorder point, R, shouldbe used?
Weekly demand for Lego at a Wal-Mart store is normally distributed with a mean of 2,500 boxes and a standard deviation of 500. Demand is assumed to be stationary and the mean demand is used as forecast. Each order costs Wal-Mart $145 and holding cost per box per year is estimated at $1.5. Lead time is 2 weeks and the store manager has decided to review inventory every 4 weeks. (Assume a periodic review policy) a. What is safety stock requirement for a service level of 90%? b. What is the order-up-to level? c. What is the total annual variable cost?
3. A pastry shop is considering how much hot chocolate to prepare each morning. Hot chocolate costs $0.10 per oz to make and sells for $0.40 per oz. Customers can buy hot chocolate in any number of ounces that they wish. Any hot chocolate not sold by the end of the day is discarded. The daily demand for hot chocolate is normally distributed with a mean of 1,200 oz and a standard deviation of 150 oz. How much hot chocolate should the pastry shop make each morning? You may use a z-table for this question.
The purchasing manager for the Atlantic Steel Company must determine a policy for orderingcoal to operate 12 converters. Each converter requires exactly 5 tons of coal per day to operate,and the firm operates 360 days per year. The purchasing manager has determined that the orderingcost is $80 per order and the cost of holding coal is 20% of the average dollar value of inventoryheld. The purchasing manager has negotiated a contract to obtain the coal for $12 per ton forthe coming year. If 5 days of lead time are required to receive an order of coal, how much coal should be on hand when an order is placed?
XYZ Company must order tires from its warehouse. It costs $10400 to place an order and to review the inventory level. Annual tire sales are normally distributed with mean 18000 and variance 4,000,000. It costs $8 per year to hold a tire in inventory, and each order arrives two weeks after being placed. The Company uses periodic review (R, S) policy. What is the review interval R (in years), estimated using EOQ.? Select one: a. 0.3801 b. 0.19 c. 0.2687 d. 1.075 e. 0.1267
The manager of Alaina’s Garden Center must make the annual purchasing plans for rakes, gloves, and other gardening items. One of the items the company stocks is Fast-Grow, a liquid fertilizer. The sales of this item are seasonal, with peaks in the spring, summer, and fall months. Quarterly demand (in cases) for the past 2 years follows: Quarter Year 1 Year 2 1 2 3 4 45 339 299 222 67 444 329 283 Total 905 1,123 If the expected sales for Fast-Grow are 1,850 cases for year 3, use the multiplicative seasonal method to prepare a forecast for each quarter of the year.
A golf specialty wholesaler operates 50 weeks per year. Management is trying to determine an inventory policy for its 1-irons, which have the following characteristics:Demand (D) = 2,000 units/yearDemand is normally distributedStandard deviation of weekly demand = 3 unitsOrdering cost = $40/orderAnnual holding cost (H) = $5/unitsDesired cycle-service level = 90 percentLead time (L) = 4 weeksa. If the company uses a periodic review system, what should P and T be? Round P to the nearest week.b. If the company uses a continuous review system, what should R be?
A department store uses a (Q, R) policy to control its inventories. Sales of a pocket FM radioaverage 1.4 radios per week. The radio costs the store $50.00, and fixed costs of replenishmentamount to $20.00. Holding costs are based on a 20 percent annual interest charge, and thestore manager estimates a $12.50 cost of lost profit and loss of goodwill if the radio is demanded when out of stock. Reorder lead time is 2 weeks, and statistical studies have shownthat demand over the lead time is accurately described by a Poisson distribution. Find the optimallot sizes and reorder points for this item.
Sampaguita Company makes corsages that it sells through salespeople on the streets. Each sells for P2 and has variable production costs of P0.80. The salespeople receive a P0.50 commission on each corsage they sell, and the company must spend P0.05 to get rid of each unsold corsage. The corsages last for only one week and cannot be carried in inventory.The manager of the firm had estimated demand per week and associated probabilities as follows:Demand Probability100,000 0.20120,000 0.20140,000 0.30160,000 0.30 The optimal weekly production of the corsage is? Please show solution.