CONNECT F/OPERATIONS MGMT
14th Edition
ISBN: 9781264344963
Author: Stevenson
Publisher: INTER MCG
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Textbook Question
Chapter 12, Problem 19P
Given this information:
Expected demand during lead time = 300 units
Standard deviation of lead time demand = 30 units
Determine each of the following, assuming that lead time demand is distributed normally:
a. The ROP that will provide a risk of stockout of 1 percent during lead time.
b. The safety stock needed to attain a 1 percent risk of stockout during lead time.
c. Would a stockout risk of 2 percent require more or less safety stock than a 1 percent risk? Explain. Would the ROP be larger, smaller, or unaffected if the acceptable risk were 2 percent instead of 1 percent? Explain.
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Students have asked these similar questions
1) Store A orders on a weekly basis. Its weekly demand is 50 units with a standard deviation of five units. The holding cost is $10 per unit per week and a 0.99 in-stock probability is desired. What is Store A’s average holding cost incurred each week for on-order inventory if lead time is five weeks?
2) Store A orders on a weekly basis. Its weekly demand is 50 units with a standard deviation of five units. The holding cost is $10 per unit per week and a 0.99 in-stock probability is desired. What is Store A’s average on-hand inventory if lead time is five weeks?
A health and nutrition store stocks a multivitamin with an annual demand of 1,000 bottles has
Co = $26.50 and Ch = $7. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with ? = 25 and ? = 5.
(a)
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(b)
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reorder point:________
safety stock:________
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Chapter 12 Solutions
CONNECT F/OPERATIONS MGMT
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