Tobacco is shipped from North Carolina to a cigarette manufacturer in Cambodia once a year. The reorder point, without safety stock, is 200 kilos. The carrying cost is $15 per kilo per year, and the cost of a stockout is $70 per kilo per year. Given the following demand probabilities during the lead time, how much safety stock should be carried?

Tobacco is shipped from North Carolina to a cigarette manufacturer in Cambodia once a year. The reorder point, without safety stock, is 200 kilos. The carrying cost is $15 per kilo per year, and the cost of a stockout is $70 per kilo per year. Given the following demand probabilities during the lead time, how much safety stock should be carried?

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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Question

Tobacco is shipped from North Carolina to a
cigarette manufacturer in Cambodia once a year. The reorder
point, without safety stock, is 200 kilos. The carrying cost is
$15 per kilo per year, and the cost of a stockout is $70 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) PROBABILITY
0.1
0.1
100
0.1
200
0.2
300
0.4
400
0.2

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