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 o each item. Replenishment lead time is three months. Assume 1year=48 weeks. Suppose stock out cost and lost of good will can not be estimated, what lot size and reorder level should be used for the coffe machine with a 96% type 1 service level? Q= 76.32 R= 199.424

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 o each item. Replenishment lead time is three months. Assume 1year=48 weeks. Suppose stock out cost and lost of good will can not be estimated, what lot size and reorder level should be used for the coffe machine with a 96% type 1 service level? Q= 76.32 R= 199.424

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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