It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 x 14 BSW. A perpetual inventory system has been used, so you examine this, as well as other records, and come up with the following data: Cost per tire $ 55 each 25 percent of tire cost per year Holding cost Demand Ordering cost $ Standard deviation of daily demand Delivery lead time 1,040 per year. 24 per order 4 tires 5 days Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 95 percent. Assume the demand occurs 365 days per year.

It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 x 14 BSW. A perpetual inventory system has been used, so you examine this, as well as other records, and come up with the following data: Cost per tire $ 55 each 25 percent of tire cost per year Holding cost Demand Ordering cost $ Standard deviation of daily demand Delivery lead time 1,040 per year. 24 per order 4 tires 5 days Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 95 percent. Assume the demand occurs 365 days per year.

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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