Furnitures sells office chairs ordered from its flagship store. It costs $100to place an order, and the lead time is two weeks. Demand during lead time isN(40, 1.96).in future goodwill. It pays $60 for each chair and sells it for $100. The annualholding a chair inventory is 30% of its purchase cost.Furnitures estimates that each stockout causes a loss of $50a) Assuming that all demand is backlogged, what are the reorder point and thesafety stock level?b) To meet 99% service objective, what should be the safety stock level forType 1 Service? For Type 2 Service?

Consider the following information:He sells secretarial chairs.• Annual demand normally distributed,…

Answered: Furnitures sells office chairs ordered…

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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Similar questions

Every year XYZ Corp. sells 3,300 units of its product. It is charged $56.50 every time it reorders from its supplier and its inventory holding costs are $6.20 per unit. In order to minimize overall inventory costs, what would be the firm's average number of units that it holds?
Which of the following statements about the basic EOQ model is Ture? If the holding cost were to increase, the EOQ would reduce. If the ordering cost were to decrease, the EOQ would increase. If annual demand were to double, the EOQ would also double. If annual demand were to increase, the EOQ would reduce.
Gyona purchases meat from the local supermarket at $5 per kilo and sell it at $9 per kilo. any unsold meat is sold to the Chinese restaurant near by at $2 per kilo. Gyona is sure that the demand follows a normal distribution with a mean of 100 kilograms and a standard deviation of 15 kilograms. - How many kilograms should she order each day?
Please answer questions 9 and 10 based on this data. Daily demand for packages of five videotapes at a warehouse store is found to be normally distributed with a mean of 50 and a standard deviation of 5. When the store orders more tapes, the orders take four days to arrive. Assume the store is open 360 days a year. If the store wants the probability of stocking out to be no more than 5%, and demand each day is independent of the day before, what should be the safety stock? Please round your answer to two decimals. Safety stock= 17 Question 10 4 pts If the store wants the probability of stocking out to be no more than 5%, and demand each day is independent of the day before, what reorder point should be set? Please round your answer to two decimals. Reorder point=
Daily demand for a product is 10 units. The standard deviation of demand during the review and lead time is 20 units. The review period is 30 days and the lead time is 14 days. At the time of review there are 150 units in stock. If the probability of stockout should not exceed 2%, how many units should be ordered?
A health and nutrition store stocks a multivitamin with an annual demand of 1,000 bottles has Co probability distribution with μ = 25 and σ = 5. (a) What is the recommended order quantity? (Round your answer to the nearest integer.) = $23.50 and C = $9. The demand exhibits some variability such that the lead-time demand follows a normal (b) What are the reorder point and safety stock if the store desires at most a 4% probability of stock-out on any given order cycle? (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.)
Consider a fixed period inventory model. The daily demand of the product has a mean of 30 and standard deviation of 4; orders are placed every 18 days and shipment lead time is 6 days. The store has a service policy of 96%. What is the inventory required?
Oriental Healthcare is a multi-specialty hospital catering to a variety of illnessesconnected to the heart and respiratory systems. The demand for a class of medicalconsumable is generally random. Recently, an examination of the stores records overa period of 10 weeks revealed the following weekly consumption pattern:Week No. Consumption(Units)1 1202 1093 894 1405 1106 1457 778 1209 13010 80The supplier of the item takes on an average 2 weeks to deliver once the order isplaced. Design an appropriate inventory control policy for a periodic review systemfor a review frequency of 4 weeks for a 99% service level
The weekly demand for a product is 770 units. The standard deviation of daily demand is 10 units. The firm reviews its inventory every 28 days. Each order for the product arrives 9 days after placement. At the time of review, there are 10 units backorder. If 95 percent of all demand is to be satisfied from items in stock: What is the z value corresponding to desired service level? (A number, no space, 2 decimal value)
HairGlow uses a chemical in the production of one of its hair products at a rate of 1,000 litres per year. The cost of placing an order and of receiving the chemical once it arrives in the warehouse is Ksh 30 and Ksh 70 respectively. The chemical is purchased at Ksh 20 per litre. Holding costs per year for a litre of the chemical is considered to be 15 percent of its cost. Find the optimal order size
A customer buys 1 ABC Jan 35 put for a premium of $3 and simultaneously buys 100 shares of ABC stock for $35 per share. The customer will break even when the stock is selling for what price per share at expiration?
A company uses a special widget (SP) in its production process. The company uses 100 SP units per month in a fairly uniform production process. Each SP unit costs R30. Due to the stringent controls associated with the ordering of the widget the order cost is R300 per order. The widget requires special handling and refrigeration and the cost of holding inventory is estimated to be R200 per unit year. Which order size would you recommend that the company use? Suppose the supplier of the special widget offers the company a reduced purchase price of R29/widget, but they need to order 100 or more at a time. Would you recommend that the company accept this offer? Annual demand Inventory carrying cost Order cost Purchase price 1200 widgets (100 x 12) R200/widget R300/order R30/widget

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