A product with an annual demand of 1,000 units has C = $27.50 and Ch = $7. The demand exhibits some variability such that the lead- time demand follows a normal probability distribution with μ = 25 and o = 5. (a) What is the recommended order quantity? (Round your answer to the earest integer.) (b) What are the reorder point and safety stock if the firm desires at most a 4% probability of stock-out on any given order cycle? (You may need to use the appropriate appendix table or technology to answer this question. Round your answers to the nearest integer.) reorder point safety stock (c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to four decimal places.) How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest integer.)

MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
icon
Related questions
Question
A product with an annual demand of 1,000 units has C = $27.50 and Ch = $7. The demand exhibits some variability such that the lead-
time demand follows a normal probability distribution with μ = 25 and o = 5.
(a) What is the recommended order quantity? (Round your answer to the
earest integer.)
(b) What are the reorder point and safety stock if the firm desires at most a 4% probability of stock-out on any given order cycle? (You
may need to use the appropriate appendix table or technology to answer this question. Round your answers to the nearest
integer.)
reorder point
safety stock
(c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to
four decimal places.)
How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest
integer.)
Transcribed Image Text:A product with an annual demand of 1,000 units has C = $27.50 and Ch = $7. The demand exhibits some variability such that the lead- time demand follows a normal probability distribution with μ = 25 and o = 5. (a) What is the recommended order quantity? (Round your answer to the earest integer.) (b) What are the reorder point and safety stock if the firm desires at most a 4% probability of stock-out on any given order cycle? (You may need to use the appropriate appendix table or technology to answer this question. Round your answers to the nearest integer.) reorder point safety stock (c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to four decimal places.) How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest integer.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Similar questions
Recommended textbooks for you
MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman