Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Six months ago, Picasso Paints rented an additional shop in the main street of Wodonga to sell paint specifically to DIY customers, whilst trader customer

Six months ago, Picasso Paints rented an additional shop in the main street of Wodonga to sell paint specifically to DIY customers, whilst trader customer purchase out of the manufacturing plant.  Picasso Paints has been unable to adequately hold inventory to satisfy the customer demand.  Anna Sasin, who is the store manager has come up with the following probability distribution demand to try and understand customer behaviour and therefore be able to order enough paint.


Demand per week
Probability


Lead time (days)
Probability
0
0.05


1
0.50
10
0.20


2
0.45
20
0.40


3
0.05
30
0.20






40
0.15







The shop does not have adequate storage to keep a plentiful supply and rents additional space at the back of the shop at a cost of $1 per tin.  The stock out cost is $40 per tin.  Anna Sasin usually places and order when stock is down to 20 tins.  

Required:

  1. Current there are 10 tins in inventory.  Simulate a 20 week scenario for Anna Sasin.  Calculate the weekly stock out and holding cost. 
  2. In a separate table repeat the simulation assuming the reorder point is 10 tins.  Discuss the results 

Step by Step Solution

3.44 Rating (151 Votes )

There are 3 Steps involved in it

Step: 1

A B D E G H Demand per 1 week Probability Random Number Range 2 005 005 Carrying cost 1 3 10 02 005 ... 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

Intermediate Accounting

Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield

13th Edition

9780470374948, 470423684, 470374942, 978-0470423684

More Books

Students also viewed these Accounting questions

Question

Who are holders of record? When does a stock sell ex dividend?

Answered: 1 week ago

Question

How does a project manager calculate start and finish times?

Answered: 1 week ago

Question

What is your greatest weakness?

Answered: 1 week ago