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Given this information: Expected demand during lead time = 300 units Standard deviation of lead time demand 30 units %3D Determine each of the following, assuming that lead time demand is distributed normally: a. The ROP that will provide a risk of stockout of 1 percent during lead time. b. The safety stock needed to attain a 1 percent risk of stockout during lead time. c. Would a stockout risk of 2 percent require more or less safety stock than a 1 percent risk? Explain. Would the ROP be larger, smaller, or unaffected if the acceptable risk were 2 percent instead of 1 percent? Explain.

Given this information: Expected demand during lead time = 300 units Standard deviation of lead time demand 30 units %3D Determine each of the following, assuming that lead time demand is distributed normally: a. The ROP that will provide a risk of stockout of 1 percent during lead time. b. The safety stock needed to attain a 1 percent risk of stockout during lead time. c. Would a stockout risk of 2 percent require more or less safety stock than a 1 percent risk? Explain. Would the ROP be larger, smaller, or unaffected if the acceptable risk were 2 percent instead of 1 percent? Explain.

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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anager s rationale is that with a U-shaped cost curve that is fairly flat at its minimum, the differ- ence in total annual cost between 800 and 801 units would be small anyway. How would you reply to the manager's suggestion? What order size would you recommend? m 18. A newspaper publisher uses roughly 800 feet of baling wire each day to secure bundles of newspa- pers while they are being distributed to carriers. The paper is published Monday through Saturday. Lead time is six workdays. What is the appropriate reorder point quantity, given that the company desires a service level of 95 percent, if that stockout risk for various levels of safety stock is as fol- lows: 1,500 feet, .10; 1,800 feet, .05; 2,100 feet, .02; and 2,400 feet, .01? 19. Given this information: Expected demand during lead time = 300 units %3D Standard deviation of lead time demand = 30 units Determine each of the following, assuming that lead time demand is distributed normally: a. The ROP that will provide a risk of stockout of 1 percent during lead time. b. The safety stock needed to attain a 1 percent risk of stockout during lead time. c. Would a stockout risk of 2 percent require more or less safety stock than a 1 percent risk? Explain. Would the ROP be larger, smaller, or unaffected if the acceptable risk were 2 percent instead of 1 percent? Explain. 20. Given this information: Lead-time demand = 600 pounds Standard deviation of lead time demand = 52 pounds (Assume normality.) %3D Acceptable stockout risk during lead time = 4 percent a. What amount of safety stock is appropriate? b. When should this item be reordered? .ld result from to have any safety stock? decision pot
Transcribed Image Text:anager s rationale is that with a U-shaped cost curve that is fairly flat at its minimum, the differ- ence in total annual cost between 800 and 801 units would be small anyway. How would you reply to the manager's suggestion? What order size would you recommend? m 18. A newspaper publisher uses roughly 800 feet of baling wire each day to secure bundles of newspa- pers while they are being distributed to carriers. The paper is published Monday through Saturday. Lead time is six workdays. What is the appropriate reorder point quantity, given that the company desires a service level of 95 percent, if that stockout risk for various levels of safety stock is as fol- lows: 1,500 feet, .10; 1,800 feet, .05; 2,100 feet, .02; and 2,400 feet, .01? 19. Given this information: Expected demand during lead time = 300 units %3D Standard deviation of lead time demand = 30 units Determine each of the following, assuming that lead time demand is distributed normally: a. The ROP that will provide a risk of stockout of 1 percent during lead time. b. The safety stock needed to attain a 1 percent risk of stockout during lead time. c. Would a stockout risk of 2 percent require more or less safety stock than a 1 percent risk? Explain. Would the ROP be larger, smaller, or unaffected if the acceptable risk were 2 percent instead of 1 percent? Explain. 20. Given this information: Lead-time demand = 600 pounds Standard deviation of lead time demand = 52 pounds (Assume normality.) %3D Acceptable stockout risk during lead time = 4 percent a. What amount of safety stock is appropriate? b. When should this item be reordered? .ld result from to have any safety stock? decision pot
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