Petromax Enterprises uses a continuous review inventory control system for one of its SKUs. The following information is available on the item. The firm operates 48 weeks in a year. Refer to the table for z-values. ≻Demand = 91,000 units/year ≻Ordering cost = $38.50/order ≻Holding cost = $4.50/unit/year ≻Average lead time = 9 weeks ≻Standard deviation of weekly demand = 120 units a. The economic order quantity for this item is _____ units. (Enter your response rounded to the nearest whole number.) b. If Petromax wants to provide a 90% service level, the safety stock is _____ units (enter your response rounded to the nearest whole number) and the reorder point is ____units (enter your response rounded to the nearest whole number).
Petromax Enterprises uses a continuous review inventory control system for one of its SKUs. The following information is available on the item. The firm operates 48 weeks in a year. Refer to the table for z-values. ≻Demand = 91,000 units/year ≻Ordering cost = $38.50/order ≻Holding cost = $4.50/unit/year ≻Average lead time = 9 weeks ≻Standard deviation of weekly demand = 120 units a. The economic order quantity for this item is _____ units. (Enter your response rounded to the nearest whole number.) b. If Petromax wants to provide a 90% service level, the safety stock is _____ units (enter your response rounded to the nearest whole number) and the reorder point is ____units (enter your response rounded to the nearest whole number).
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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Question
3. Petromax Enterprises uses a continuous review inventory control system for one of its SKUs. The following information is available on the item. The firm operates
48 weeks in a year. Refer to the table for z-values.
≻Demand = 91,000 units/year
≻Ordering cost = $38.50/order
≻Holding cost = $4.50/unit/year
≻Average lead time = 9 weeks
≻Standard deviation of weekly demand = 120 units
a. The economic order quantity for this item is _____ units. (Enter your response rounded to the nearest whole number.)
b. If Petromax wants to provide a 90% service level, the safety stock is _____ units (enter your response rounded to the nearest whole number) and the reorder point is ____units (enter your response rounded to the nearest whole number).
Transcribed Image Text:Petromax Enterprises uses a continuous review inventory control system for one of its SKUS. The following information is available on the item. The firm operates
ad
48 weeks in a year. Refer to the standard normal table for z-values.
> Demand = 91,000 units/year
> Ordering cost = $38.50/order
> Holding cost = $4.50/unit/year
>Average lead time = 9 weeks
> Standard deviation of weekly demand = 120 units
at
ile
Les
a. The economic order quantity for this item is units. (Enter your response rounded to the nearest whole number.)
nsa
b. If Petromax wants to provide a 90% service level, the safety stock is
units (enter your response rounded to the nearest whole number) and the reorder point is
units (enter your response rounded to the nearest whole number).
te M
Transcribed Image Text:g cost = $38.50/order
e le
Data Table
ic
The table below shows the total area under the normal curve for a point that is Z standard deviations to the
right of the mean.
wa
yo
0.00
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
0.5000 0.5040 0.5080 0.5120 0.5160 0.5199 0.5239 0.5279 0.5319 0.5359
0.5398 0.5438 0.5478 0.5517 0.5557 0.5596 0.5636 0.5675 0.5714 0.5754
0.5793 0.5832 0.5871 0.5910 0.5948 0.5987 0.6026 0.6064 0.6103 0.6141
0.6179 0.6217 0.6255 0.6293 0.6331 0.6368 0.6406 0.6443 0.6480 0.6517
0.6554 0.6591 0.6628 0.6664 0.6700 0.6736 | 0.6772 0.6808 0.6844 0.6879
0.6915 0.6950 0.6985 0.7019 0.7054 0.7088 0.7123 0.7157 0.7190 0.7224
0.7258 0.7291 0.7324 0.7357 0.7389 0.7422 0.7454 0.7486 0.7518 0.7549
0.7580 0.7612 0.7642 0.7673 0.7704 0.7734 0.7764 0.7794 |0.7823 0.7852
0.7881 0.7910 0.7939 0.7967 0.7996 0.8023 0.80510.8079 0.8106 0.8133
0.8159 0.8186 0.8212 0.8238 0.8264 0.8289 0.8315 0.8340 0.8365 0.8389
0.8413 0.8438 0.8461 0.8485 0.8508 0.8531 0.8554 0.8577 0.8599 0.8621
0.8643 0.8665 0.8686 0.8708 0.8729 0.8749 0.8770 | 0.8790 | 0.8810
0.8849 0.8869 0.8888 0.8907 0.8925 0.8944 0.8962 0.8980 0.8997 0.9015
0.9032 0.9049 0.9066 0.9082 0.90990.9115 0.9131 0.91470.9162 0.9177
0.9192 0.9207 0.9222 0.9236 0.9251 0.9265 0.9279 0.9292 | 0.9306 0.9319
0.9332 0.9345 0.9357 0.9370 0.9382 0.9394 0.9406 0.9418| 0.9430 | 0.9441
0.9452 0.9463 0.9474 0.9485 0.9495 0.9505 0.9515 0.9525 0.9535 0.9545
0.9554 0.9564 0.9573 0.9582 0.95910.9599 0.9608 0.9616 |0.9625 0.9633
0.9641 0.9649 0.9656 0.9664 0.9671 0.9678 0.9686 0.9693 0.9700 0.9706
0.9713 0.9719 0.9726 0.9732 0.9738 | 0.9744 0.9750 0.9756 0.9762 0.9767
0.9773 0.9778 0.9783 0.9788 0.9793 0.9798 0.9803 0.9808 0.9812 0.9817
0.9821 0.9826 0.9830 0.9834 0.9838 0.9842 0.9846 0.9850 0.9854 0.9857
0.9861 0.9865 0.9868 0.9871 0.9875 0.9878 0.9881 0.9884 |0.9887 0.9890
2.3
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
0.8830
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2.0
2.1
2.2
0.9893 0.9896 | 0.9898 0.9901 0.9904 0.9906 0.9909 0.9911 0.9913 0.9916
0.9918 0.9920 0.9922 0.9925 0.9927 |0.9929 0.9931 0.9932 0.9934 0.9936
0.9938 0.9940 | 0.9941 0.9943 0.9945 0.9946 0.9948 0.9949 0.9951 0.9952
0.9953 0.9955 0.9956 0.9957 0.9959 0.9960 0.99610.9962 0.9963 0.9964
0.9965 0.9966 0.9967 0.9968 0.9969 0.9970 0.9971 |0.9972 0.9973 0.9974
0.9974 0.9975 0.9976 0.9977 0.9977 | 0.9978 0.9979 0.9980 0.9980 0.9981
0.9981 0.9982 0.9983 0.9983 0.9984 0.9984 0.9985 0.9985 0.9986 0.9986
0.9987 0.9987 0.9987 | 0.9988 0.9988 0.9989 0.9989 0.9989 0.9990 0.9990
0.9990 0.9991 0.9991 0.9991 0.9992 0.9992 0.9992 0.9992 0.9993 0.9993
0.9993 0.9993 0.9994 0.9994 0.9994 0.9994 0.9994 0.9995 0.9995 0.9995
0.9995 0.9995 0.9995 0.9995 0.9996 0.9996 0.9996 0.9996 0.9996 0.9997
2.4
2.5
2.6
2.7
2.8
2.9
3.0
3.1
3.2
3.3
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