Question
Weekly demand for notebooks at Vidyamandir store is normally distributed with a mean of 70 and a standard deviation of 10. Mr. Pradeep (owner of
Weekly demand for notebooks at Vidyamandir store is normally distributed with a mean of 70 and a standard deviation of 10. Mr. Pradeep (owner of Vidyamandir) has historically purchased a 300 per month from a local supplier (Jain) who charges Rs 40 per notebook. Mr. Pradeep has identified another potential source (distant supplier- Patro from Cuttack) willing to supply the notebook at Rs 35 per notebook. Before making decision, Mr. Pradeep evaluates the performance of the two suppliers. Vidyamandir currently use a continuous review policy for managing inventory and aims for a cycle service level of 95 percent. Which supplier should Mr. Pradeep go with if Vidyamandir has a holding cost of 5 percent? [Note Fs? (0.95) =1.64] [7] Jain Patro Average lead time 1 week 2 weeks SD in lead time 1 week 1 week Minimum batch size 500 750
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