M9.5

M95 Peter Sagan is in charge of maintaining hospital supplies at Champs Hospital. During the past year the mean weekly demand for a special type of tubing was 136 packages of this tubing with a standard deviation of 13 packages of tubing. The lead time for receiving this tubing from the supplier is 1.5 weeks. Peter would like to maintain a 95% service level and places an order for 750 packages every time an order is placed. a} How much safety stock should be used for a 95% service level? b] If the weekly demand is 186 and there is a 1.5 week lead time - what is the reorder point [95% service level}? c] How much safety stock should be used for a 99% service level? d] If the weekly demand is 186 and there is a 1.5 week lead time what is the reorder point [99% sawice level}? e) If the carrying cost per year is $0.5llx'unitfyear - what is the additional cost associate with the 99% service level compared to 95% service level [i.e. cost of safety stock at 99% level - cost of safety stock at 95% service level)? M95. Cavendish Convenience Stores purchases 1000 U.S. Road Maps a year for its inventory from its supplier, who offers pricing at quantity discounts. The cost for Cavendish to place an order is $42, and the annual carrying cost is 15%fyear. What quantity should Cavendish order? The quantities and pricing from this supplier are shown in the following table: ORDER QUANTITY UNIT PRICE 0-149 $12.00 150-349 $11.70 350999 $11.50 1000 or more $11.20 a} What is the ECG when the unit price is 512? b] What is the total cost {holding + purchase+ ordering} when purchasing from the supplier where the unit price is $11.70? :1 What is the total cost (holding + purchase+ ordering} when purchasing from the supplier where the unit price is $11.50? d] What is the total cost [holding + purchase+ ordering} when purchasing from the supplier where the unit price is $11.20? e) Based On the total costs, what quantitv should be ordered frOm the supplier