After taking a production seminar, Al Weiss, the owner of Weiss's paint store mentioned in Problem 14, decides that his stock-out cost of $10 may not be very accurate and switches to a service level model. He decides to set his lot size by the EOQ formula and determines his reorder point so that there is no stock-out in 90 percent of the order cycles. a. Find the resulting (Q, R) values. b. Suppose that, unfortunately, he really wanted to satisfy 90 percent of his demands (that is, achieve a 90 percent fill rate). What fill rate did he actually achieve from the policy determined in part (a)?

After taking a production seminar, Al Weiss, the owner of Weiss's paint store mentioned in Problem 14, decides that his stock-out cost of $10 may not be very accurate and switches to a service level model. He decides to set his lot size by the EOQ formula and determines his reorder point so that there is no stock-out in 90 percent of the order cycles. a. Find the resulting (Q, R) values. b. Suppose that, unfortunately, he really wanted to satisfy 90 percent of his demands (that is, achieve a 90 percent fill rate). What fill rate did he actually achieve from the policy determined in part (a)?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

After taking a production seminar, AI Weiss, the owner of Weiss's paint store mentioned in
Problem 14, decides that his stock-out cost of $10 may not be very accurate and switches to a
service level model. He decides to set his lot size by the EOQ formula and determines his
reorder point so that there is no stock-out in 90 percent of the order cycles.
a. Find the resulting (Q, R) values.
b. Suppose that, unfortunately, he really wanted to satisfy 90 percent of his demands (that is,
achieve a 90 percent fill rate). What fill rate did he actually achieve from the policy determined in
part (a)?

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