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You may need to use the appropriate technology to answer this question. A health and nutrition store stocks a multivitamin with an annual demand of 1,000 bottles has C = $26.50 and C₁ = $7. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with u = 25 and a = 5. (a) What is the recommended order quantity? (Round your answer to the nearest integer.) (b) What are the reorder point and safety stock if the store desires at most a 6% probability of stock-out on any given order cycle? (Round your answers to the nearest integer.) reorder point safety stock (c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to four decimal places.) How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest integer.)

You may need to use the appropriate technology to answer this question. A health and nutrition store stocks a multivitamin with an annual demand of 1,000 bottles has C = $26.50 and C₁ = $7. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with u = 25 and a = 5. (a) What is the recommended order quantity? (Round your answer to the nearest integer.) (b) What are the reorder point and safety stock if the store desires at most a 6% probability of stock-out on any given order cycle? (Round your answers to the nearest integer.) reorder point safety stock (c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to four decimal places.) How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest integer.)

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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You may need to use the appropriate technology to answer this question. A health and nutrition store stocks a multivitamin with an annual demand of 1,000 bottles has Co = $26.50 and C₁ = $7. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with μ = 25 and o = 5. (a) What is the recommended order quantity? (Round your answer to the nearest integer.) (b) What are the reorder point and safety stock if the store desires at most a 6% probability of stock-out on any given order cycle? (Round your answers to the nearest integer.) reorder point safety stock (c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to four decimal places.) How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest integer.)
Transcribed Image Text:You may need to use the appropriate technology to answer this question. A health and nutrition store stocks a multivitamin with an annual demand of 1,000 bottles has Co = $26.50 and C₁ = $7. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with μ = 25 and o = 5. (a) What is the recommended order quantity? (Round your answer to the nearest integer.) (b) What are the reorder point and safety stock if the store desires at most a 6% probability of stock-out on any given order cycle? (Round your answers to the nearest integer.) reorder point safety stock (c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to four decimal places.) How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest integer.)
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