Tobacco is shipped from North Carolina to a cigarette manufacturer in Cambodia once a year. The reorder point, withoutsafety stock, is 200 kilos. The carrying cost is $15 per kilo per year, and the cost of a stockout is $65 per kilo per year.Given the following demand probabilities during the lead time, how much safety stock should be carried?Demand During Lead Time (Kilos)0100200300400Probability0.10.10.20.40.2The optimal quantity of safety stock which minimizes expected total cost is 100 kilos (enter your response as awhole number).

Safety stock refers to the additional inventory or stock held by a company beyond its average demand…

Answered: The optimal quantity of safety stock…

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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What is the purpose of carrying safety stock? Under what circumstances would you carry high/low safety stock?
University of Florida football programs areprinted 1 week prior to each home game. Attendance averages90,000 screaming and loyal Gators fans, of whom two-thirdsusually buy the program, following a normal distribution, for$4 each. Unsold programs are sent to a recycling center thatpays only 10 cents per program. The standard deviation is5,000 programs, and the cost to print each program is $1.a) What is the cost of underestimating demand for eachprogram?b) What is the overage cost per program?c) How many programs should be ordered per game?d) What is the stockout risk for this order size?
A National chain of type fitters stocks a popular type for which the following information is available. The company operates on 50-week year and Normally operates from Monday to Friday only. Average usage 140 types per day Minimum usage 90 types per day Maximum usage 175 types per day Lead time 10 to 16 days Reorder quality 3000 Cost per types n$1500 Holding cost per unit 3% of unit cost Ordering cost per year n$75.50 Calculate the ordinary coat based on the current reorder quantity?
Which among the following methods assigns costs on the assumption that the inventory quantities on hand represent those last purchased or produced? Select one alternative: First-in, first-out Weighted-average cost Specific identification Last-in, first-out
Increasing the variability of either demand or lead time ________ reorder points. Group of answer choices Decreases Have no effect on Increases
Develop a measure of risk to go along with the ordering policy. This measure should be quantifiable.
The demand for a particular part called SKU 005 is 1,500 units a year. The cost of one SKU 005 is $64.00. It costs $60.00 to place an order SKU 005, and the user of SKU 005 has a per year inventory carrying cost of 25% of unit cost. Assume that there are 250 working days in the year where SKU 005 is used. Once the purchasing manager for SKU 005 places an order, it always takes the vendor 5 working days to deliver that order. What should the purchasing manager’s reorder point be? ) A. 12 ОВ. 30 Ос. 36 O D. 24 O E. 5
Which of the following is one of the assumptions of EOQ model? Group of answer choices Annual demand is known and even throughout the year Orders are received partially There are quantity discounts Multiple items are involved Lead time varies
20 Lead time for one of your fastest-moving products is a) What would be an appropriate reorder point? 100 days. Demand during this period averages units per day. units (enter your response as a whole number). b) How does your answer change if demand during lead time doubles? c) How does your answer change if demand during lead time drops in half? units (enter your response as a whole number). units (enter your response as a whole number).
The daily demand for printer paper at the School of Business is approximately normal with a mean of 15.2 boxes and a standard deviation of 1.6 per day. The Administrative Assistant reviews the inventory every 30 days, and the lead time is 5 days. The division set a policy of satisfying 96% of the demand for paper. If there are 125 boxes of printer paper in inventory at the beginning of this review period, how many boxes of printer paper should be ordered? What is the variance of demand during the review period plus the lead-time period? What is the standard deviation of demand during the review period plus the lead-time period? A. Variance = 76.80 Standard deviation = 8.76 B. Variance = 89.60 Standard deviation = 9.47 C. Variance = 9.47 Standard deviation = 89.60 D. Variance = 12.8 Standard deviation = 3.58
Explore the role and implications of safety stock within the framework of the Wilson approach for effective inventory control.
Suppose you have a very critical part that is used in the production of your product (so critical that it is impossible to continue production unless it is present). For such a part which of the two inventory control systems could you prefer?: Fixed Order Quantity or Fixed Order Period. Why? Explain briefly

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The optimal quantity of safety stock which minimizes expected total cost is 100 kilos (enter your response as a whole number).