Each year, a company sells an average of 10,000 boxes of a drink. Annual demand for...
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Each year, a company sells an average of 10,000 boxes of a drink. Annual demand for this drink is normally distributed with a standard deviation of 50 boxes. The company orders this drink from a regional distributor. Each order is filled in an average of two weeks. The lead time is normally distributed with one week standard deviation. The cost of placing each order is $100, and the annual cost of holding one box in inventory is $5. The per-unit stockout cost (because of loss of goodwill and the cost of placing a special order) is assumed to be $50. The company is willing to assume that all demand is backlogged. Determine the proper order quantity, reorder point, and safety stock level for the computer store. Assume that annual demand is normally distributed. What is the probability that a stockout occurs during the lead time? Each year, a company sells an average of 10,000 boxes of a drink. Annual demand for this drink is normally distributed with a standard deviation of 50 boxes. The company orders this drink from a regional distributor. Each order is filled in an average of two weeks. The lead time is normally distributed with one week standard deviation. The cost of placing each order is $100, and the annual cost of holding one box in inventory is $5. The per-unit stockout cost (because of loss of goodwill and the cost of placing a special order) is assumed to be $50. The company is willing to assume that all demand is backlogged. Determine the proper order quantity, reorder point, and safety stock level for the computer store. Assume that annual demand is normally distributed. What is the probability that a stockout occurs during the lead time?
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Related Book For
Managing Business Process Flows Principles of Operations Management
ISBN: 978-0136036371
3rd edition
Authors: Ravi Anupindi, Sunil Chopra, Sudhakar Deshmukh, Jan Van Mieg
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