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What should the lot size be? O It will vary by order. O Less than 3500 O Greater than 3500 but less than 3750 O Greater than 3750 but less than 4000 Greater than 4000

What should the lot size be? O It will vary by order. O Less than 3500 O Greater than 3500 but less than 3750 O Greater than 3750 but less than 4000 Greater than 4000

Practical Management Science
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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**Question: What should the lot size be?** - ○ It will vary by order. - ○ Less than 3500 - ○ Greater than 3500 but less than 3750 - ○ Greater than 3750 but less than 4000 - ○ Greater than 4000 This multiple-choice question allows users to select one option regarding the size of a lot. Options range from varying by order to specific numerical ranges.
Transcribed Image Text:**Question: What should the lot size be?** - ○ It will vary by order. - ○ Less than 3500 - ○ Greater than 3500 but less than 3750 - ○ Greater than 3750 but less than 4000 - ○ Greater than 4000 This multiple-choice question allows users to select one option regarding the size of a lot. Options range from varying by order to specific numerical ranges.
**Crainium, Inc. Inventory Management Case Study** Cranium, Inc. procures term papers from an international supplier through a continuous review inventory system. This system ensures that inventory is monitored continuously and replenishment orders are placed when stock levels fall to a previously determined reorder point. ### Demand and Supply Details: - **Average Daily Demand:** The demand for a popular paper model is approximately 300 units per day. - **Demand Variability:** The demand has a standard deviation of 30 units daily, indicating some variability in how many units are needed each day. - **Order Processing Cost:** Each order incurs a processing cost of $60. - **Lead Time:** There is a lead time of five days for the delivery of the orders from the supplier. ### Holding Costs and Service Level: - **Holding Cost:** The cost to hold one paper in inventory is $0.25 per year. - **Service Level Policy:** The company aims to maintain a high service level of 98%, ensuring that they consistently meet customer demand without stockouts. Cranium, Inc. operates for 200 days annually, implying that the inventory management strategies need to be optimized for a substantial portion of the year. This case study demonstrates the critical components involved in managing inventory, including demand forecasting, cost analysis, and maintaining service levels, all of which are essential for efficient supply chain operations.
Transcribed Image Text:**Crainium, Inc. Inventory Management Case Study** Cranium, Inc. procures term papers from an international supplier through a continuous review inventory system. This system ensures that inventory is monitored continuously and replenishment orders are placed when stock levels fall to a previously determined reorder point. ### Demand and Supply Details: - **Average Daily Demand:** The demand for a popular paper model is approximately 300 units per day. - **Demand Variability:** The demand has a standard deviation of 30 units daily, indicating some variability in how many units are needed each day. - **Order Processing Cost:** Each order incurs a processing cost of $60. - **Lead Time:** There is a lead time of five days for the delivery of the orders from the supplier. ### Holding Costs and Service Level: - **Holding Cost:** The cost to hold one paper in inventory is $0.25 per year. - **Service Level Policy:** The company aims to maintain a high service level of 98%, ensuring that they consistently meet customer demand without stockouts. Cranium, Inc. operates for 200 days annually, implying that the inventory management strategies need to be optimized for a substantial portion of the year. This case study demonstrates the critical components involved in managing inventory, including demand forecasting, cost analysis, and maintaining service levels, all of which are essential for efficient supply chain operations.
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