Answered: The demand faced by CBA company each…

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

The demand faced by CBA company each week is estimated to be normally distributed with a mean of 1000 units and a standard deviation of 250. Lead time of delivery is fixed at 2 weeks. Ordering cost is $800 per order, variable cost per unit ordered is $4, the inventory carrying charge is 20% per year. Assume 50 weeks per year. CBA would like the probability to satisfy customer demand be 95%. Find the (Q,R) policy.

If the leadtime is 2 weeks and a standard deviation of 1 week. Find the (Q,R) policy.

What is the impact of the weekly demand’s standard deviation on the (Q,R) policy?

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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