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A public utility intends to buy a turbine as part of an expansion plan and must now decide on the number of spare parts to order. Onc part, no. X135, can be purchased for $170 each. Carrying and disposal costs are estimated to be 190 percent of the purchase price over the life of the turbine. A stockout would cost roughly $110,000 due to downtime, ordering, and "special purchase" factors. Historical records based on the performance of similar equipment operating under similar conditions suggest that demand for spare parts will tend to approximate a Poisson distribution with a mean of 4.4 parts for the useful life of the turbine. Use Table C. a. What is the optimal number of spares to order? Optimal number of spares b. Carrying no spare parts would be the best strategy for what range of shortage cost? (Round your answer to 2 decimal places.) Shortage cost Cs

A public utility intends to buy a turbine as part of an expansion plan and must now decide on the number of spare parts to order. Onc part, no. X135, can be purchased for $170 each. Carrying and disposal costs are estimated to be 190 percent of the purchase price over the life of the turbine. A stockout would cost roughly $110,000 due to downtime, ordering, and "special purchase" factors. Historical records based on the performance of similar equipment operating under similar conditions suggest that demand for spare parts will tend to approximate a Poisson distribution with a mean of 4.4 parts for the useful life of the turbine. Use Table C. a. What is the optimal number of spares to order? Optimal number of spares b. Carrying no spare parts would be the best strategy for what range of shortage cost? (Round your answer to 2 decimal places.) Shortage cost Cs

Practical Management Science
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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A public utility Intends to buy a turbine as part of an expansion plan and must now decide on the number of spare parts to order. One part, no. X135, can be purchased for $170 each. Carrying and disposal costs are estimated to be 190 percent of the purchase price over the life of the turbine. A stockout would cost roughly $110,000 due to downtime, ordering, and "special purchase" factors. Historical records based on the performance of similar equipment operating under similar conditions suggest that demand for spare parts will tend to approximate a Poisson distribution with a mean of 4,4 parts for the useful life of the turbine. Use Table C. a. What is the optimal number of spares to order? Optimal number of spares b. Carrying no spare parts would be the best strategy for what range of shortage cost? (Round your answer to 2 decimal places.) Shortage cost Cs
Transcribed Image Text:A public utility Intends to buy a turbine as part of an expansion plan and must now decide on the number of spare parts to order. One part, no. X135, can be purchased for $170 each. Carrying and disposal costs are estimated to be 190 percent of the purchase price over the life of the turbine. A stockout would cost roughly $110,000 due to downtime, ordering, and "special purchase" factors. Historical records based on the performance of similar equipment operating under similar conditions suggest that demand for spare parts will tend to approximate a Poisson distribution with a mean of 4,4 parts for the useful life of the turbine. Use Table C. a. What is the optimal number of spares to order? Optimal number of spares b. Carrying no spare parts would be the best strategy for what range of shortage cost? (Round your answer to 2 decimal places.) Shortage cost Cs
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