3. (Ch9) A store has collected the following information on one of its products:Demand = 4,500 units/yearStandard deviation of weekly demand = 12 unitsOrdering costs = $40/orderHolding costs = $3/unit/yearCycle-service level = 90% (z for 90% = 1.28)Lead-time = 2 weeksNumber of weeks per year = 52 weeksa. If a firm uses the continuous review system to control the inventory, what would be the order quantityand reorder point?b. The firm decided to change to the periodic review system to control the item's inventory. For the mostrecent review, an inventory clerk checked the inventory of this item and found 300 units. There were noscheduled receipts or backorders at the time. How many units should be ordered? (HINT: Use the EOQmodel to derive P, the time between reviews.)

Given, Annual demand D = 4500 units Number of weeks per year = 52 weeks Daily demand d = 4500/52…

Answered: 3. (Ch9) A store has collected the…

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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In a Q system, the demand rate for strawberry ice cream is normally distributed, with an average of 295 pints per week. The lead time is 6 weeks. The standard deviation of weekly demand is 16 pints. Refer to the standard normal table for z-values. a. The standard deviation of demand during the 6-week lead time is 39 pints. (Enter your response rounded to the nearest whole number.) b. The average demand during the 6-week lead time is 1770 pints. (Enter your response as an integer.) c. The reorder point that results in a cycle-service level of 96 percent is pints. (Enter your response rounded to the nearest whole number.)
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ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but maysometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, thesupplier may take 7 days.Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also anopportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten-days-worth of inventory. (B) Economic Order Quantity 1. How much would the total inventory related (ordering plus carrying) costs be if the economic order quantity wasfollowed (excluding safety stock)? (D) Cost-Benefit Analysis: If ABC maintains its current inventory policy for the year,1. How much would the entity save it followed the reorder point and economic order quantity models?…

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