RoyalTech's South Jersey warehouse faces a daily demand that is normally distributed, with mean 1,000 and standard deviation 100 pallets.RoyalTech's supplier has a lead-time that is normally distributed, with mean 5 days and standard deviation 1 day.RoyalTech reviews its inventory periodically, that is, every 7 days. (Hint: think about the inventory model appropriate here)RoyalTech's warehouse runs 365 days a year, and the cost of carrying inventory is 18.25% per year.The supplier charges RoyalTech $2,000 per pallet, and $5,000 per delivery.RoyalTech plans to maintain 98% SL.NORMSINV(0.98) = 2.054. L(2.054) = 0.0073.Answer the following questions.1. How much safety stock should Royal Tech carry? [Select]v pallets.2. What is RoyalTech's average inventory? [ Select ]pallets.3. What is the total relevant cost incurred by RoyalTech per day? $ [ Select]4. What is the Fill Rate that RoyalTech is able to achieve for this service level? [ Select ]

Given data: Demand = 1000 units per day Standard deviation = 100 per day Lead time = 5 days…

Answered: RoyalTech's South Jersey warehouse…

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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Chicago's Hard Rock Hotel distributes a mean of 1,200 bath towels per day to guests at the pool and in their rooms. This demand is normally distributed with a standard deviation of 100 towels per day, based on occupancy. The laundry firm that has the linen contract requires a 3-day lead time. The hotel expects a 99% service level to satisfy high guest expectations. Refer to the standard normal table Z Pr(Z) 0.38 65 0.50 69 0.67 75 0.84 80 1.04 85 1.28 90 1.41 92 1.56 94 1.65 95 1.75 96 2.06 98 2.33 99 a) What is the reorder point? b) What is the safety stock? enter your response here towels (round your response to the nearest whole number).
A particular branch of ABC Co. is experiencing some inventory control problems. The manager currently orders 5,000 units four times each year to handle annual demand of 20,000 units. Each order costs P15 and each unit costs P1.50 to carry. The branch maintains a safety stock of 200 units. IF proper management is applied, how much will be the inventory cost savings on the particular branch?
Chicago's Hard Rock Hotel distributes a mean of 1,000 bath towels per day to guests at the pool and in their rooms. This demand is normally distributed with a standard deviation of 95 towels per day, based on occupancy. The laundry firm that has the linen contract requires a 4-day lead time. The hotel expects a 98% service level to satisfy high guest expectations. Refer to the standard normal table for z-values. a) What is the reorder point? towels (round your response to the nearest whole number). towels (round your response to the nearest whole number). b) What is the safety stock? Z-Table Z 0.38 0.50 0.67 0.84 1.04 1.28 1.41 1.56 1.65 1.75 2.06 2.33 Pr(Z) 65 69 75 80 85 90 92 94 95 96 98 99
A store uses an EOQ system for one of its most popular product. The product has a daily demand of 49 units. The store purchases the product from a supplier. The supplier has an order lead time of 6 days. The store uses an order quantity of 1617 units. A shipment of the supplier always at the beginning of day and the store always place a new order at the end of day. The store also monitors its inventory continuously. Assume that a shipment arrives at the beginning of day 1 and the beginning inventory becomes 1617 units. What is the inventory level at the end of day 12?
Gentle Ben's Bar and Restaurant uses 7,200 quart bottles of an imported wine each year. The effervescent wine costs $9 per bottle and is served only in whole bottles because it loses its bubbles quickly. Ben figures that it costs $25 each time an order is placed, and holding costs are 40 percent of the purchase price. It takes six weeks for an order to arrive. Weekly demand is 144 bottles (closed two weeks per year) with a standard deviation of 40 bottles. Ben would like to use an inventory system that minimizes inventory cost and will provide a 99 percent service probability. a. What is the economic quantity for Ben to order? b. At what inventory level should he place an order?
Mr. Beautiful, an organization that sells weight training sets, has an ordering cost of $40 for the BB-1 set (BB-1 stands for Body Beautiful Number 1). The carrying cost for BB-1 is $5 per set per year. To meet demand, Mr. Beautiful orders large quantities of BB-1 7 times a year. The stockout cost for BB-1 is estimated to be $50 per set. Over the past several years, Mr. Beautiful has observed the following demand during the lead time for BB-1: Demand During Lead Time 40 50 60 70 80 90 The reorder point for BB-1 is 60 sets. What level of safety stock should be maintained for BB-1? The optimal quantity of safety stock which minimizes expected total cost is Probability 0.1 0.2 0.2 0.2 0.2 0.1 sets (enter your response as a whole number).
A plant makes monthly shipments of electric drills to a wholesaler in average lot sizes of 280 drills. The whole-saler’s average demand is 70 drills a week, and the lead time from the plant is 3 weeks. The wholesaler mustpay for the inventory from the moment the plant makes a shipment. If the wholesaler is willing to increase itspurchase quantity to 350 units, the plant will give priority to the wholesaler and guarantee a lead time of only2 weeks. What is the effect on the wholesaler’s cycle and pipeline inventories?
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Popular Company places 10 orders per year with its supplier. Each order is for an amount exactly equal to the EOQ. Popular’s order cost has been determined to be $50 per order. Popular carries no safety stock at all. What is Popular’s order cost per order?
An electronics retailer wants to develop an inventory policy to achieve 99% chance of not getting stockouts for a chip. The daily demand for the chip is estimated to be Normal with mean 200 and standard deviation of 20. They count the chip inventory every 2 weeks to place an order, and it takes 11 days for the ordered chips to be delivered. The retailer operates 7 days a week, 365 days a year. They are going to implement an order-up-to model. A) What base stock level should they choose? B) What is the number of chips they would have on order (on average)? C) When they checked their inventory of chips to place a new order, they found that they ran out of stock completely. In addition, they have 10 chips on way to be delivered, while there are five customers who paid for 20 chips in total and are waiting to receive their chips. How many chips should the retailer order?
A coffee shop consumes 350 lbs of coffee per week at a steady rate. The coffee shop buys coffee from a supplier at the cost of $10 per lb, and ordering cost of $5 per order. The supplier takes 8 days to deliver an order (assume that 1 week = 7 days). What should be the reorder point (in pounds) for the coffee shop (i.e., at what level of inventory it should place an order with the supplier).
What is the average inventory? What is the average flow time? What is the required safety inventory to achieve the desired service level? What is the required re-order point to achieve the desired service level?

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