Variable name Avg. annual demand Avg. daily demand Std. deviation of demand Variable Drear 31,025 units per year 85 units per day 20 units per day DDay Opday Unit purchase cost Inventory holding cost factor Order cost 42 $ per unit 24% per year 225 $ per order units per order 12 days k Economic order quantity Q Q.3a Mean lead time Std. deviation of lead time OL 4 days Mean demand during lead time DL units units per lead time type 1 service level Q.3b Std. deviation of lead time demand ODL In-stock probability during lead time No. of std. deviations corresponding to a Safety stock Reorder point SS units R units Q.3a units Expected number of units out of stock per cycle Fill rate n_R type 2 service level 3. Consider the demand, lead time, and cost information provided in the worksheet. At its last retreat, the Executive Committee determined that 95% of consumer demand should be filled from on-hand inventory. a) Which inventory control parameter values (reorder point and order quantity) will enable the firm to meet this customer service objective while minimizing costs? b) What will be the in-stock probability (type 1 service level) in this case?

Variable name Avg. annual demand Avg. daily demand Std. deviation of demand Variable Drear 31,025 units per year 85 units per day 20 units per day DDay Opday Unit purchase cost Inventory holding cost factor Order cost 42 $ per unit 24% per year 225 $ per order units per order 12 days k Economic order quantity Q Q.3a Mean lead time Std. deviation of lead time OL 4 days Mean demand during lead time DL units units per lead time type 1 service level Q.3b Std. deviation of lead time demand ODL In-stock probability during lead time No. of std. deviations corresponding to a Safety stock Reorder point SS units R units Q.3a units Expected number of units out of stock per cycle Fill rate n_R type 2 service level 3. Consider the demand, lead time, and cost information provided in the worksheet. At its last retreat, the Executive Committee determined that 95% of consumer demand should be filled from on-hand inventory. a) Which inventory control parameter values (reorder point and order quantity) will enable the firm to meet this customer service objective while minimizing costs? b) What will be the in-stock probability (type 1 service level) in this case?

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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