The home appliance department of a large department store is using a lot size-reorder point system to control the replenishment of a particular model of coffe machin store sells an average of 12 machines each week. Weekly demand follows a normal distribution with variance 9. The store pays $20 for each coffe machine, which it S 575. Fixed costs of replenishment amount to $28 The accounting department recommends a 20 percent interest rate for the cost of capital including storage and break each item If a customer demands the coffe machine when it is out of stock, the customer will generally go elsewhere. Loss-of-goodwill costs are estimated to be about $25 per cO machine Replenishment lead time is three months Assume 1year=48 weeks If lot sizes are based on the EOQ formula, what lot size and reorder level should be used for the coffe machine? Q=90 R= 182
The home appliance department of a large department store is using a lot size-reorder point system to control the replenishment of a particular model of coffe machin store sells an average of 12 machines each week. Weekly demand follows a normal distribution with variance 9. The store pays $20 for each coffe machine, which it S 575. Fixed costs of replenishment amount to $28 The accounting department recommends a 20 percent interest rate for the cost of capital including storage and break each item If a customer demands the coffe machine when it is out of stock, the customer will generally go elsewhere. Loss-of-goodwill costs are estimated to be about $25 per cO machine Replenishment lead time is three months Assume 1year=48 weeks If lot sizes are based on the EOQ formula, what lot size and reorder level should be used for the coffe machine? Q=90 R= 182
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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![QUESTION 2
The home appliance department of a large department store is using a lot size-reorder point system to control the replenishment of a particular model of coffe machine. The
store sells an average of 12 machines each week. Weekly demand follows a normal distribution with variance 9. The store pays $20 for each coffe machine, which it sells for
$75. Fixed costs of replenishment amount to $28 The accounting department recommends a 20 percent interest rate for the cost of capital including storage and breakage of
each item.
If a customer demands the coffe machine when it is out of stock, the customer will generally go elsewhere. Loss-of-goodwill costs are estimated to be about $25 per coffe
machine
Replenishment lead time is three months. Assume 1year=48 weeks
If lot sizes are based on the EOQ formula, what lot size and reorder level should be used for the coffe machine?
Q = 90
R= 182
Chic](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7cdf97f1-c84d-4ee2-a8d1-11369b502a84%2Fa4772a0b-530a-432b-aed8-42937a44a330%2Fc167md9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:QUESTION 2
The home appliance department of a large department store is using a lot size-reorder point system to control the replenishment of a particular model of coffe machine. The
store sells an average of 12 machines each week. Weekly demand follows a normal distribution with variance 9. The store pays $20 for each coffe machine, which it sells for
$75. Fixed costs of replenishment amount to $28 The accounting department recommends a 20 percent interest rate for the cost of capital including storage and breakage of
each item.
If a customer demands the coffe machine when it is out of stock, the customer will generally go elsewhere. Loss-of-goodwill costs are estimated to be about $25 per coffe
machine
Replenishment lead time is three months. Assume 1year=48 weeks
If lot sizes are based on the EOQ formula, what lot size and reorder level should be used for the coffe machine?
Q = 90
R= 182
Chic
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