The annual demand for sugar at a local soft drink company is normally distributed with a mean of 800 tons and a standard deviation of 25 tons. The sugar sells for OMR 500 each ton, and the annual inventory holding cost rate is 10%. Ordering costs are OMR5 per order. The delivery time for sugar is 5 working days. Assume that there are 250 working days in a year. 1. Determine the optimal order quantity. 2. What size of safety stock should the company keep at a service-level of 90%? 3. Suppose they keep 8 extra tons in inventory as a safety stock. What is the service-level obtained?

The annual demand for sugar at a local soft drink company is normally distributed with a mean of 800 tons and a standard deviation of 25 tons. The sugar sells for OMR 500 each ton, and the annual inventory holding cost rate is 10%. Ordering costs are OMR5 per order. The delivery time for sugar is 5 working days. Assume that there are 250 working days in a year. 1. Determine the optimal order quantity. 2. What size of safety stock should the company keep at a service-level of 90%? 3. Suppose they keep 8 extra tons in inventory as a safety stock. What is the service-level obtained?

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Description: The annual demand for sugar at a local soft drink company isnormally distributed with a mean of 800 tons and a standarddeviation of 25 tons. The sugar sells for OMR 500 each ton, andthe annual inventory holding cost rate is 10%. Ordering costs areOM

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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