A supplier always avoids shortages with overtime production. The company follows a base-stock policy, but the...
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A supplier always avoids shortages with overtime production. The company follows a base-stock policy, but the operations manager must decide what base- stock level is optimal. Demand is normally distributed with mean 4000 and standard deviation 700). The holding cost is only $0.10 per period per unit but if there is a - shortage of even just one unit! the supplier must run overtime production with a fixed cost of $250 and an extra cost per unit of $3. The product can be produced in any quantity during regular or overtime production. By simulating thousands of times, determine the base-stock level (to the nearest 100) that minimizes the average holding/overtime production cost per period. a) What is the best base-stock level? b) What is the average cost per period when using the best base stock level? c) During what proportion of periods is overtime production required (for the best base- stock level)? Activate Windows Go to Settings to activate Windows. A supplier always avoids shortages with overtime production. The company follows a base-stock policy, but the operations manager must decide what base- stock level is optimal. Demand is normally distributed with mean 4000 and standard deviation 700). The holding cost is only $0.10 per period per unit but if there is a - shortage of even just one unit! the supplier must run overtime production with a fixed cost of $250 and an extra cost per unit of $3. The product can be produced in any quantity during regular or overtime production. By simulating thousands of times, determine the base-stock level (to the nearest 100) that minimizes the average holding/overtime production cost per period. a) What is the best base-stock level? b) What is the average cost per period when using the best base stock level? c) During what proportion of periods is overtime production required (for the best base- stock level)? Activate Windows Go to Settings to activate Windows.
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