Question: If in problem 11.15, management said that it is considering increasing the service level to one stockout every 2 years, what would the new safety

If in problem 11.15, management said that it is considering increasing the service level to one stockout every 2 years, what would the new safety stock be? If the cost of carrying inventory on this item is $10 per unit per year, what is the cost of increasing the inventory from one stockout per year to one every 2 years?

In Problem 11.15

Management has stated that it will tolerate one stockout per year. The forecast of annual demand for a particular SKU is 100,000 units, and it is ordered in quantities of 10,000 units. The lead time is 2 weeks. Sales history for the past 10 weeks follows.

Step by Step Solution

★★★★★

3.41 Rating (160 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Sigma 489 units Service 20 120 95 Safety f... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Introduction Materials Management Questions!

A company that manufactures snow shovels has one plant and two distribution centers (DCs). Given the following information for the two DCs, calculate the gross requirements, projected available, and...

A company has a warehouse with the dimensions shown in the following diagram. How many pallets measuring 48 40 can be stored three high if there is to be a 2 space between the pallets? 60 4' Aisle...

A company ships a particular product to a market located 1500 miles from the plant at a cost of $4.50 per mile. Normally it ships 500 units at a time. What is the line haul cost per unit?

11.15 Management has stated that it will tolerate one stockout per year. The forecast of annual demand for a particular SKU is 100,000 units, and it is ordered in quantities of 10,000 units. The lead...

11.16. If in problem 11.15, management said that it is considering increasing the service level to one stockout every 2 years, what would the new safety stock be? If the cost of carrying inventory on...

9. Management has stated that it will tolerate one stockout per year, The forecast of annual demand for a particular SKU is 100,000 units, and it is ordered in quantities of 10,000 units. The lead...

9 . Management has stated that it will tolerate one stockout per year. The forecast of annual demand for a particular SKU is 1 0 0 , 0 0 0 units, and it is ordered in quantities of 1 0 , 0 0 0 units....

Problem One (25 points): Below table shows the sale history for the past 10 weeks of a furniture company. The operation manager knows that her company tolerate just one stockout per year. She was...

2. How would you convince John to set an economically viable service level target for non-life-saving medical supplies? SMU024 STOCK-UP VS STOCK-OUT: THE INVENTORY MANAGEMENT DILEMMA AT A MOBILE...

Refer to Palms balance sheet in Appendix A. What current liabilities related to income taxes are on its balance sheet? Explain the meaning of each income tax account identified.

A 3.0 kg particle is in simple harmonic motion in one dimension and moves according to the equation x = (5.0 m) cos [(/3 rad/s)t /4 rad], with / in seconds. (a) At what value of x is the potential...

Suppose that a 95% confidence interval for the proportion of men who experience sleep apnea (irregular breathing during sleep) is .11 to .17 and a 95% confidence interval for the proportion of women...

6. Speculate on the nature of the relationship between the credit and collections department and the sales department at Wachusett Window in the last two questions.

11. What are the objectives of finance? How can these objectives be met ?

10. What is the objective of marketing? W hat three ways will help it achieve this objective?

4. What are an order qualifier and an order winner?

The director of a daycare center noticed that the infants were getting more diaper rashes than usual in the summer time. The policy of the center was to change the diapers on a schedule every three...

Atlantic Healthcare is an investor-owned hospital chain that owns and operate nine hospitals in Maryland, Virginia, and the District of Columbia. Marcia Long, a recent graduate of a prominent...

Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 770,000 shares of stock outstanding....