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Kelly's Service Station does a large business in tune-ups. Demand has been averaging 280 spark plugs per week. Holding costs are $0.04 per plug per week, and reorder costs are estimated at $10 per order. Kelly's does not want to be out of stock on more than 1% of his orders. There is a one-day delivery time. The standard deviation of demand is five plugs per day. Assume a normal distribution of demand during lead time and a seven-day work week. (The station operates 52 weeks per year.) (a) What inventory policy do you suggest for Kelly's station? (Round the order size and the reorder point to the nearest whole number and the cycle time to two decimal places.) Kelly's service station should order spark plugs every weeks when the supply reaches (b) What is the average amount of safety stock for the reorder point for part (a)? (Round your answer to the nearest whole number.) (c) What is the total variable weekly cost including safety stock cost (in dollars)? (Round your answer to two decimal places.) $

Kelly's Service Station does a large business in tune-ups. Demand has been averaging 280 spark plugs per week. Holding costs are $0.04 per plug per week, and reorder costs are estimated at $10 per order. Kelly's does not want to be out of stock on more than 1% of his orders. There is a one-day delivery time. The standard deviation of demand is five plugs per day. Assume a normal distribution of demand during lead time and a seven-day work week. (The station operates 52 weeks per year.) (a) What inventory policy do you suggest for Kelly's station? (Round the order size and the reorder point to the nearest whole number and the cycle time to two decimal places.) Kelly's service station should order spark plugs every weeks when the supply reaches (b) What is the average amount of safety stock for the reorder point for part (a)? (Round your answer to the nearest whole number.) (c) What is the total variable weekly cost including safety stock cost (in dollars)? (Round your answer to two decimal places.) $

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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Kelly's Service Station does a large business in tune-ups. Demand has been averaging 280 spark plugs per week. Holding costs are $0.04 per plug per week, and reorder costs are estimated at $10 per order. Kelly's does not want to be out of stock on more than 1% of his orders. There is a one-day delivery time. The standard deviation of demand is five plugs per day. Assume a normal distribution of demand during lead time and a seven-day work week. (The station operates 52 weeks per year.) (a) What inventory policy do you suggest for Kelly's station? (Round the order size and the reorder point to the nearest whole number and the cycle time to two decimal places.) Kelly's service station should order spark plugs every weeks when the supply reaches (b) What is the average amount of safety stock for the reorder point for part (a)? (Round your answer to the nearest whole number.) (c) What is the total variable weekly cost including safety stock cost (in dollars)? (Round your answer to two decimal places.) $
Transcribed Image Text:Kelly's Service Station does a large business in tune-ups. Demand has been averaging 280 spark plugs per week. Holding costs are $0.04 per plug per week, and reorder costs are estimated at $10 per order. Kelly's does not want to be out of stock on more than 1% of his orders. There is a one-day delivery time. The standard deviation of demand is five plugs per day. Assume a normal distribution of demand during lead time and a seven-day work week. (The station operates 52 weeks per year.) (a) What inventory policy do you suggest for Kelly's station? (Round the order size and the reorder point to the nearest whole number and the cycle time to two decimal places.) Kelly's service station should order spark plugs every weeks when the supply reaches (b) What is the average amount of safety stock for the reorder point for part (a)? (Round your answer to the nearest whole number.) (c) What is the total variable weekly cost including safety stock cost (in dollars)? (Round your answer to two decimal places.) $
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