Mr. Beautiful, an organization that sells weight training sets, has an ordering cost of $45 for the BB-1 set (BB-1 stands for Body Beautiful Number 1). The carrying costfor BB-1 is $18 per set per year. To meet demand, Mr. Beautiful orders large quantities of BB-1 7 times a year. The stockout cost for BB-1 is estimated to be $40 perset. Over the past several years, Mr. Beautiful has observed the following demand during the lead time for BB-1:Demand During Lead TimeProbability100.1200.2300.2400.2500.2600.1The reorder point for BB-1 is 30 sets. What level of safety stock should be maintained for BB-1?The optimal quantity of safety stock which minimizes expected total cost issets (enter your response as a whole number).

In the question, given that stock out costs per set =40, the carrying costs per set per year=18,…

The reorder point for BB-1 is 30 sets. What level of safety stock should be maintained for BB-1? The optimal quantity of safety stock which minimizes expected total cost is | sets (enter your response as a whole number).

The reorder point for BB-1 is 30 sets. What level of safety stock should be maintained for BB-1? The optimal quantity of safety stock which minimizes expected total cost is | sets (enter your response as a whole number).

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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Question

Mr. Beautiful, an organization that sells weight training sets, has an ordering cost of $45 for the BB-1 set (BB-1 stands for Body Beautiful Number 1). The carrying cost
for BB-1 is $18 per set per year. To meet demand, Mr. Beautiful orders large quantities of BB-1 7 times a year. The stockout cost for BB-1 is estimated to be $40 per
set. Over the past several years, Mr. Beautiful has observed the following demand during the lead time for BB-1:
Demand During Lead Time
Probability
10
0.1
20
0.2
30
0.2
40
0.2
50
0.2
60
0.1
The reorder point for BB-1 is 30 sets. What level of safety stock should be maintained for BB-1?
The optimal quantity of safety stock which minimizes expected total cost is
sets (enter your response as a whole number).

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