The M. M. Pod Company is a retail chain that specializes in camping equipment. They carry a special tent designed for high altitudes. The demand is generally normally distributed at 20 per week with a standard deviation of 3. The store is open 52 weeks a year. The cost of each tent is $150 and the holding cost (including opportunity and physical holding) is 15%. The ordering cost is $55. The lead time for receiving a shipment of new tents is 6 weeks and is fairly constant. They only want a 5% chance of a stockout. Q1. What is the optimal order quantity? Q2. What should be the safety stock to be? Q3. What is the reorder point ?

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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The M. M. Pod Company is a retail chain that specializes in
camping equipment. They carry a special tent designed for high
altitudes. The demand is generally normally distributed at 20 per
week with a standard deviation of 3. The store is open 52 weeks
a year. The cost of each tent is $150 and the holding cost
(including opportunity and physical holding) is 15%. The
ordering cost is $55. The lead time for receiving a shipment of
new tents is 6 weeks and is fairly constant. They only want a 5%
chance of a stockout.
Q1. What is the optimal order quantity?
Q2. What should be the safety stock to be?
Q3. What is the reorder point ?
Q4. What is the average inventory?
Transcribed Image Text:The M. M. Pod Company is a retail chain that specializes in camping equipment. They carry a special tent designed for high altitudes. The demand is generally normally distributed at 20 per week with a standard deviation of 3. The store is open 52 weeks a year. The cost of each tent is $150 and the holding cost (including opportunity and physical holding) is 15%. The ordering cost is $55. The lead time for receiving a shipment of new tents is 6 weeks and is fairly constant. They only want a 5% chance of a stockout. Q1. What is the optimal order quantity? Q2. What should be the safety stock to be? Q3. What is the reorder point ? Q4. What is the average inventory?
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