1. The Discount Carpet Store is open 360 days per year and sells 10,000 square yards of Super Shag carpet annually. Demand for Super Shag carpet is constant during the year. The annual carrying cost for Super Shag carpet is $0.75 per square yard and the ordering cost is $150. Based on an EOQ analysis the Discount Carpet store has determined that the relevant costs will be minimized if 2,200 square yards of Super Shag Carpet are ordered each time an order is placed. The lead time for orders is 7 days. Suppose that daily demand for Super Shag carpet is randomly distributed according to a normal distribution with mean 30 square yards and standard deviation of 7 square yards.

What will be the safety stock if the target inventory level is 2500?

140

200

190

300

2) A metal fabricator produces connecting rods with an outer diameter that has a 1 .01 inch specification. A machine operator takes several sample measurements over time and determines the sample mean outer diameter to be 1.002 inches with a standard deviation of .003 inch.

Calculate the process capability index for this example and decide whether the process is capable or not.

0.821, The process is not capable

0.889, The process is capable

0.889, The process is not capable

0.875, The process is capable