ACold Inc is a frozen food distributor with 10 warehouses across the country. Ivan Tory, one of the warehouse managers, wants to make sure that the inventory policies used by the warehouse are minimizing inventory while still maintaining quick delivery to ACold's customers. Since the warehouse carries hundreds of different products, Ivan decided to study one. He picked Caruso's Frozen Pizza (CFP). Average daily demand for CFPs is normally distributed with a mean of 384 and a standard deviation of 158. Since ACold orders at least one truck from their supplier each day, ACold can essentially order any quantity of CFP it wants each day. In fact, ACold's computer system is designed to implement an order-up-to policy for each product. Ivan notes that any order for CFPs arrives 5 days after the order. a. Suppose an order-up-to level of 2472 is used. What is the expected on-hand inventory? Use Table 14.1 and round to nearest integer. b. Suppose an order-up-to level of 2404 is used. What is the expected on-order inventory? Round your answer to the nearest integer. C. Suppose an order-up-to level of 2062 is used. What is the in-stock probability? Use Table 14.1. Round your answer to one decimal. d. Suppose ACold wants a 0.92 in-stock probability. What should the order-up-to level be? Use Table 14.1. Round your answer to the nearest integer. [|.|||

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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ACold Inc is a frozen food distributor with 10 warehouses across the country. Ivan Tory, one of the warehouse
managers, wants to make sure that the inventory policies used by the warehouse are minimizing inventory
while still maintaining quick delivery to ACold's customers. Since the warehouse carries hundreds of different
products, Ivan decided to study one. He picked Caruso's Frozen Pizza (CFP). Average daily demand for CFPs
is normally distributed with a mean of 384 and a standard deviation of 158. Since ACold orders at least one
truck from their supplier each day, ACold can essentially order any quantity of CFP it wants each day. In fact,
ACold's computer system is designed to implement an order-up-to policy for each product. Ivan notes that any
order for CFPs arrives 5 days after the order.
a.
Suppose an order-up-to level of 2472 is used. What is the expected on-hand inventory?
Use Table 14.1 and round to nearest integer.
b. Suppose an order-up-to level of 2404 is used. What is the expected on-order inventory?
Round your answer to the nearest integer.
C.
Suppose an order-up-to level of 2062 is used. What is the in-stock probability? Use
Table 14.1. Round your answer to one decimal.
d. Suppose ACold wants a 0.92 in-stock probability. What should the order-up-to level be?
Use Table 14.1. Round your answer to the nearest integer.
[|.|||
Transcribed Image Text:ACold Inc is a frozen food distributor with 10 warehouses across the country. Ivan Tory, one of the warehouse managers, wants to make sure that the inventory policies used by the warehouse are minimizing inventory while still maintaining quick delivery to ACold's customers. Since the warehouse carries hundreds of different products, Ivan decided to study one. He picked Caruso's Frozen Pizza (CFP). Average daily demand for CFPs is normally distributed with a mean of 384 and a standard deviation of 158. Since ACold orders at least one truck from their supplier each day, ACold can essentially order any quantity of CFP it wants each day. In fact, ACold's computer system is designed to implement an order-up-to policy for each product. Ivan notes that any order for CFPs arrives 5 days after the order. a. Suppose an order-up-to level of 2472 is used. What is the expected on-hand inventory? Use Table 14.1 and round to nearest integer. b. Suppose an order-up-to level of 2404 is used. What is the expected on-order inventory? Round your answer to the nearest integer. C. Suppose an order-up-to level of 2062 is used. What is the in-stock probability? Use Table 14.1. Round your answer to one decimal. d. Suppose ACold wants a 0.92 in-stock probability. What should the order-up-to level be? Use Table 14.1. Round your answer to the nearest integer. [|.|||
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