A restaurant uses 5,000 quart bottles of ketchup each year. The ketchup costs $3.00per bottle and is served only in whole bottles because its taste quickly deteriorates. Therestaurant figures that it costs $10.00 each time an order is placed, and holding costsare 20 percent of the purchase price. It takes 3 weeks for an order to arrive. Therestaurant operates 50 weeks per year. The restaurant would like to use an inventorysystem that minimizes inventory cost. The restaurant has figured that the mosteconomical order size or EOQ is approx. 409 (rounding up the decimals).Suppose that things have become uncertain and that customer demand is no moreconstant. Customer demand is now normally distributed with mean being the same asgiven in the problem description and standard deviation = 30 units per week. Thesupply source is still very reliable and as a result the lead time is constant. Find out thesafety stock needed to achieve 95% customer service level.O 556507585None of the above

Safety stock is a reservation of inventory which helps to meet any uncertainity in demand variation.…

Answered: A restaurant uses 5,000 quart bottles…

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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I need a detailed explanation on how to solve this problem: A paint shop implements an inventory policy on its stock of white paint, which costs the store $6 per can. Monthly demand for cans of white paint is normal with mean 28 and standard deviation 8. The replenishment lead time is 14 weeks. Excess demand is backordered, but costs $10 per back ordered can in labor and loss of goodwill. There is a fixed cost of $15 per order, and the holding cost is based on 30% interest rate per annum. In your computations, assume 4 weeks per month. - Write down the model name and parameters. - What are the optimal lot size and reorder points for white paint (include the formulas)? - What is the optimal safety stock (include the formula)? *** Suppose the paint shop from the above problem adopts a service level policy. - What are the optimal lot size and reorder points for white paint, such that 90% of the cycles are filled without backordering (include all formulas)? - What is the fill rate…
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