XYZ Print Inc. uses plain paper for copying needs. Weekly demand for that paper follows a normal distribution with mean 100 and standard deviation of 50 (measured in reams). Each week, a replenishment order is placed with its supplier and the order arrives one week later. All copying orders that cannot be satisfied immediately due to the lack of paper are backordered. a. What is the standard deviation of demand over two weeks? Assume demands are independent across weeks? b. Suppose it uses 306 boxes as its order-up-to level. What is its expected on-hand inventory?

XYZ Print Inc. uses plain paper for copying needs. Weekly demand for that paper follows a normal distribution with mean 100 and standard deviation of 50 (measured in reams). Each week, a replenishment order is placed with its supplier and the order arrives one week later. All copying orders that cannot be satisfied immediately due to the lack of paper are backordered. a. What is the standard deviation of demand over two weeks? Assume demands are independent across weeks? b. Suppose it uses 306 boxes as its order-up-to level. What is its expected on-hand inventory?

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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Rick Jerz is attempting to perform an inventory analysison one of his most popular products. Annual demand for thisproduct is 5,000 units; ca rrying cost is $50 per unit per year; ordercosts for his company typically run nearly $30 per order; and leadtime averages I 0 days. (Assume 250 working days per year.)a) What is the economic order quantity?b) What is the average inventory?c) What is the optimal number of orders per year?d) What is the optimal number of working days between orders?e) What is the total annual inventory cost (carrying cost+ ordering cost)?t) What is the reorder poi nt?
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Thomas Kratzer is the purchasing manager for theheadquarters of a large insurance company chain with a centralinventory operation. Thomas’s fastest-moving inventory item hasa demand of 6,000 units per year. The cost of each unit is $100, and the inventory carrying cost is $10 per unit per year. The aver-age ordering cost is $30 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 120 units. (This is acorporate operation, and there are 250 working days per year.)a) What is the EOQ?b) What is the average inventory if the EOQ is used?c) What is the optimal number of orders per year?d) What is the optimal number of days in between any two orders?e) What is the annual cost of ordering and holding inventory?f ) What is the total annual inventory cost, including the cost ofthe 6,000 units?