Tax Preparers Inc. works 280 days per year. The company uses adding machine tape at a rate of 6 rolls per day. Usage is believed to be normally distributed with a standard deviation of 3 rolls during lead time. The cost of ordering the tape is $16 and holding costs are $0.31 per roll per year. Lead time is 3 days. (a) Calculate the economic order quantity. (Round up your answer to the nearest whole number, e.g. 125.) (b) What reorder point will provide an order cycle service level of 97 percent? (Round up your answer to the nearest whole number, e.g. 125.) tapes (c) How much safety stock must the company hold to have a 97 percent order-cycle service level? (Round up your answer to the nearest whole number, e.g. 125.) units (d) What reorder point is needed to provide an order-cycle service level of 99 percent? (Round up your answer to the nearest whole number, e.g. 125.) tapes
Tax Preparers Inc. works 280 days per year. The company uses adding machine tape at a rate of 6 rolls per day. Usage is believed to be normally distributed with a standard deviation of 3 rolls during lead time. The cost of ordering the tape is $16 and holding costs are $0.31 per roll per year. Lead time is 3 days. (a) Calculate the economic order quantity. (Round up your answer to the nearest whole number, e.g. 125.) (b) What reorder point will provide an order cycle service level of 97 percent? (Round up your answer to the nearest whole number, e.g. 125.) tapes (c) How much safety stock must the company hold to have a 97 percent order-cycle service level? (Round up your answer to the nearest whole number, e.g. 125.) units (d) What reorder point is needed to provide an order-cycle service level of 99 percent? (Round up your answer to the nearest whole number, e.g. 125.) tapes
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Tax Preparers Inc. works 280 days per year. The company uses adding machine tape at a rate of 6 rolls per day. Usage is believed to
be normally distributed with a standard deviation of 3 rolls during lead time. The cost of ordering the tape is $16 and holding costs
are $0.31 per roll per year. Lead time is 3 days.
(a) Calculate the economic order quantity. (Round up your answer to the nearest whole number, e.g. 125.)
(b) What reorder point will provide an order cycle service level of 97 percent? (Round up your answer to the nearest whole
number, e.g. 125.)
tapes
(c) How much safety stock must the company hold to have a 97 percent order-cycle service level? (Round up your answer to the
nearest whole number, e.g. 125.)
units
(d) What reorder point is needed to provide an order-cycle service level of 99 percent? (Round up your answer to the nearest
whole number, e.g. 125.)
tapes
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