20-31 E00, uncertainty, safety stock, reorder point. Phillips Corporation is a major manufacturer of foodprocessors. It purchases motors from Viking Corporation. Annual demand is 52,000 motors per year or 1,000motors per week. The ordering cost is $360 per order. The annual carrying cost is $6.50 per motor. It cur-rently takes 2 weeks to supply an order to the assembly plant.1. What is the optimal number of motors that Phillips's managers should order according to the E00 model?2. At what point should managers reorder the motors, assuming that both demand and purchase-orderlead time are known with certainty?3. Now assume that demand can vary during the 2-week purchase-order lead time. The following tableshows the probability distribution of various demand levels:Total Demand for Motors for 2 Weeks Probability of Demand (sums to 1)1,6000.051,8000.202,0000.502,2000.202,4000.05If Phillips runs out of stock, it would have to rush order the motors at an additional cost of $5 per mo-tor. How much safety stock should the assembly plant hold? How will this affect the reorder point andreorder quantity?

EOQ stands for economic order quantity. It is a company's optimal order quantity that undervalues…

Answered: 1. What is the optimal number of motors…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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