The home appliance department of a large department store is using inventory models to control the replenishment of a particular model of Microwave ovens. The daily demand follows a normal distribution with a mean of 150 units and standard deviation of 16 units. The store pays $100 for each oven. Fixed costs of replenishment are $28. The accounting department recommends a 20% annual holding cost rate. Assume that the average lead time is 5 days with a standard deviation of 1 day. Assume 365 days a year. Part A: What is the EOQ? Part B: What is the reorder point if the maximum chance of 5% of stock out (i.e. 95% service level) is desired? Part C: What is the reorder point if a fill rate of 99% is required? Part D: Suppose management wants to simplify the process by setting the reorder point to “1000” units. Based on this policy, what is the implied chance of stock ou

The home appliance department of a large department store is using inventory models to control the replenishment of a particular model of Microwave ovens. The daily demand follows a normal distribution with a mean of 150 units and standard deviation of 16 units. The store pays $100 for each oven. Fixed costs of replenishment are $28. The accounting department recommends a 20% annual holding cost rate. Assume that the average lead time is 5 days with a standard deviation of 1 day. Assume 365 days a year. Part A: What is the EOQ? Part B: What is the reorder point if the maximum chance of 5% of stock out (i.e. 95% service level) is desired? Part C: What is the reorder point if a fill rate of 99% is required? Part D: Suppose management wants to simplify the process by setting the reorder point to “1000” units. Based on this policy, what is the implied chance of stock ou

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Description: The home appliance department of a large department store is using inventory models to controlthe replenishment of a particular model of Microwave ovens. The daily demand follows anormal distribution with a mean of 150 units and standard deviation of

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 13P

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