Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 100 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? (Round your answers to the nearest integer.)
(b) Suppose that an analysis of Floyd's muffler demand shows that the lead-time demand follows a normal probability distribution with mean=6 and standard deviation=2. If Floyd's management can tolerate one stock-out per year, what is the revised reorder point? (Round your answers to the nearest integer.)
(c) What is the safety stock for part (b)?(Round your answers to the nearest integer.)
(d) If Ch = $4/unit/year, what is the extra cost (in $ per year) due to the uncertainty of demand? (Round your answers to the nearest integer.)

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

Information Systems Management

Authors: Barbara McNurlin

8th Edition

0132437155, 9780132437158

More Books

Students also viewed these General Management questions