Tax Preparers, Inc. works 250 days per year. Th e companyuses adding machine tape at a rate of eight rolls per day. Usageis believed to be normally distributed with a standard deviationof three rolls during lead time. Th e cost of ordering the tape is$10, and holding costs are $0.30 per roll per year. Lead time istwo days.(a) Calculate the economic order quantity.(b) What reorder point will provide an order-cycle servicelevel of 97 percent?(c) How much safety stock must the company hold to have a97 percent order-cycle service level?(d) What reorder point is needed to provide an order-cycleservice level of 99 percent?(e) How much safety stock must the company hold to have a99 percent order-cycle service level?
Tax Preparers, Inc. works 250 days per year. Th e company
uses adding machine tape at a rate of eight rolls per day. Usage
is believed to be
of three rolls during lead time. Th e cost of ordering the tape is
$10, and holding costs are $0.30 per roll per year. Lead time is
two days.
(a) Calculate the economic order quantity.
(b) What reorder point will provide an order-cycle service
level of 97 percent?
(c) How much safety stock must the company hold to have a
97 percent order-cycle service level?
(d) What reorder point is needed to provide an order-cycle
service level of 99 percent?
(e) How much safety stock must the company hold to have a
99 percent order-cycle service level?
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