Need problem 2
1. Wong-Mart is an authorized distributor of ARC Co.'s LCD TV. Average and standard deviation of demand for the TV are 200 and 50 units per day, respectively. Lead time from ARC to Wong- Mart are 4 days. Wong-Mart would like to maintain 92% CSL. a) Calculate reorder point and safety stock to achieve 92% CSL. b) If ARC could reduce the lead time to 3 days, how much % the safety stock would be reduced? c) Wong-Mart is also considering a periodic review system. They would like to review the inventory every 5 days. Calculate reorder point and safety stock to achieve 92% CSL. 2. ARC's TVs are shipped from their DC in Chicago to Wong-Mart's DC in St. Louis via TL service ($2/mi), which Wong-Mart agreed to pay. The capacity of TL is limited by its maximum effective volume of 3600 ft? (but unlimited in terms of weight). The distance between the two DCs is 300 mi. The TV's unit cost is $300 and its volume is 12 ft?. Although daily demands fluctuate quite a bit as described in Problem 1, the annual demand (for 365 days) is quite stable. For simplicity, let us assume there is no uncertainty (i.e. zero standard deviation) in demands. The cost to place an order is $100, and the annual holding cost rate is 20%. a) Calculate EOQ. Is the EOQ feasible? If not, given the conditions, what is the optimal Q? b) Calculate the total annual cost for the Q obtained in part a). c) Wong-Mart is also considering other transportation modes, including LTL and railroad, to reduce the total annual cost. Which among the three modes is the best? Explain why. 1. Wong-Mart is an authorized distributor of ARC Co.'s LCD TV. Average and standard deviation of demand for the TV are 200 and 50 units per day, respectively. Lead time from ARC to Wong- Mart are 4 days. Wong-Mart would like to maintain 92% CSL. a) Calculate reorder point and safety stock to achieve 92% CSL. b) If ARC could reduce the lead time to 3 days, how much % the safety stock would be reduced? c) Wong-Mart is also considering a periodic review system. They would like to review the inventory every 5 days. Calculate reorder point and safety stock to achieve 92% CSL. 2. ARC's TVs are shipped from their DC in Chicago to Wong-Mart's DC in St. Louis via TL service ($2/mi), which Wong-Mart agreed to pay. The capacity of TL is limited by its maximum effective volume of 3600 ft? (but unlimited in terms of weight). The distance between the two DCs is 300 mi. The TV's unit cost is $300 and its volume is 12 ft?. Although daily demands fluctuate quite a bit as described in Problem 1, the annual demand (for 365 days) is quite stable. For simplicity, let us assume there is no uncertainty (i.e. zero standard deviation) in demands. The cost to place an order is $100, and the annual holding cost rate is 20%. a) Calculate EOQ. Is the EOQ feasible? If not, given the conditions, what is the optimal Q? b) Calculate the total annual cost for the Q obtained in part a). c) Wong-Mart is also considering other transportation modes, including LTL and railroad, to reduce the total annual cost. Which among the three modes is the best? Explain why
