Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

9 . Floyd Distributors, Inc., provides a variety of auto parts to small local garages. Floyd purchases parts from manufacturers according to the EOQ model

9. Floyd Distributors, Inc., provides a variety of auto parts to small local garages. Floyd purchases parts from manufacturers according to the EOQ model and then ships the parts from a regional warehouse direct to its customers. For a particular type of muffler, Floyd's EOQ analysis recommends orders with Q^*=25 to satisfy an annual demand of 200 mufflers. Floyd's has 250 working days per year, and the lead time averages 15 days. a. What is the reorder point if Floyd assumes a constant demand rate? b. Suppose that an analysis of Floyd's muffler demand shows that the lead-time demand follows a normal probability distribution with \mu =12 and \sigma =2.5. If Floyd's management can tolerate one stock-out per year, what is the revised reorder point? c. What is the safety stock for part (b)? If C_h=$ 5/ unit/year, what is the extra cost due to the uncertainty of demand?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Successful Project Management

Authors: Jack Gido, Jim Clements

4th Edition

9780324656152, 324656130, 978-0324656138

More Books

Students also viewed these General Management questions

Question

=+6. How does PR differ from advertising?

Answered: 1 week ago

Question

Who do you usually turn to for help when facing a problem?

Answered: 1 week ago