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( Inventory Management: QR Model ) An automotive warehouse stocks parts that are sold at nearby dealers. One particular part, a popular brand of oil
Inventory Management: QR Model An automotive warehouse stocks parts that are sold at nearby dealers. One particular part, a popular brand of oil filter, is purchased by the warehouse for $ each. The fixed setup cost of order processing and receipt is $ per order. The inventory carrying charge is based on a annual interest rate. Assume that if a filter is demanded when the warehouse is out of stock, then the demand is backordered, and the cost assessed for each backordered demand is $ The monthly demand for the filter follows a normal distribution with mean and standard deviation Order lead time is assumed to be five months. Note: Round intermediary results to the second decimal place, while, for the optimal order quantity ie Q and reorder level ie R round the results to the closest integers. When using the Lz table, choose the value that is closest to your zscore obtained. a Find the mean and standard deviation of the demand during the order lead time b Determine the optimal values of the order quantity and the reorder level note: use EOQ approximation for c Calculate the average annual cost of stockout associated with this item, assuming that the optimal policy ie Q and R is used. The manager of the warehouse decides that the estimation of the stockout cost of $ may not be very accurate. The manager wants to set the reorder level so that the probability of no stockout is d Determine the reorder level to achieve the probability of no stockout. The probability of no stockout is sometimes referred to as the Type service level. Another commonly used service level, namely, the Type service level or the fill rate, measures the proportion of demands that are met from stock. Specifically, Type service level fill rate Expected number of shortages in a year The average annual demand e Calculate the fill rate as defined above, assuming the reorder level of part d is used. solve this questionP
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