Concept explainers
One item a computer store sells is supplied by a vendor who handles only that item. Demand for that item recently changed, and the store manager must determine when to replenish it. The manager wants a probability of at least 96 percent of not having a stockout during lead time. The manager expects demand to average a dozen units a day and have a standard deviation of two units a day. Lead time is variable, averaging four days with a standard deviation of one day. Assume normality and that seasonality is not a factor.
a. When should the manager reorder to achieve the desired probability?
b. Why might the model not be appropriate if seasonality were present?
Want to see the full answer?
Check out a sample textbook solutionChapter 13 Solutions
Loose-leaf for Operations Management (The Mcgraw-hill Series in Operations and Decision Sciences)
- Use @RISK to analyze the sweatshirt situation in Problem 14 of the previous section. Do this for the discrete distributions given in the problem. Then do it for normal distributions. For the normal case, assume that the regular demand is normally distributed with mean 9800 and standard deviation 1300 and that the demand at the reduced price is normally distributed with mean 3800 and standard deviation 1400.arrow_forwardGive typed explanationarrow_forwardis selling Christmas trees. She purchases trees for $10 and sells for $25 each. The number of trees she can sell is normally distributed with a mean of 100 and standard deviation of 30. How many trees should purchase?arrow_forward
- Demand in each period is normally distributed with a mean of 100 and standard deviation of 50. Assuming demand across periods are independent, what is the standard deviation of the total demand over 4 periods?arrow_forwardA fish restaurant sells fish for 50$ per kg and buys it from the suppliers for 10$ per kg. Fish that were not sold during the day go bad. A manager has estimated that daily demand for fish is normally distributed with a mean of 20kg and a standard deviation of 5 kg. The manager has to decide how much fish to order per day. Find a profit-maximizing order.arrow_forwardPlease answer questions 9 and 10 based on this data. Daily demand for packages of five videotapes at a warehouse store is found to be normally distributed with a mean of 50 and a standard deviation of 5. When the store orders more tapes, the orders take four days to arrive. Assume the store is open 360 days a year. If the store wants the probability of stocking out to be no more than 5%, and demand each day is independent of the day before, what should be the safety stock? Please round your answer to two decimals. Safety stock= 17 Question 10 4 pts If the store wants the probability of stocking out to be no more than 5%, and demand each day is independent of the day before, what reorder point should be set? Please round your answer to two decimals. Reorder point=arrow_forward
- A small grocery store sells fresh produce, which it obtains from a local farmer. During the strawberry season, demand for fresh strawberries can be reasonably approximated using a normal distribution with a mean of 36 quarts per day and a standard deviation of 7 quarts per day. Excess costs run .40 cents per quart. The grocer orders 42 quarts per day.Use Table. What is the implied cost of shortage per quart?arrow_forward25. Billy’s Bakery bakes fresh bagels each morning. The daily demand for bagels is a random variable with a distribution estimated from prior experience given by # of bagels sold in one day probability 0 .05 5 .10 10 .10 15 .20 20 .25 25 .15 30 .10 35 .05 The bagels cost Billy’s 8 cents to make, and they are sold for 35 cents each. Bagels unsold at the end of the day are purchased by a nearby charity soup kitchen for 3 cents each a) Based on the discrete distribution above, how many bagels should Billy’s bake at the start of each day? b) Determine the optimal number of bagels to bake each day using a normal distribution approximation. (Hint: You must compute the mean and the variance of the demand from the discrete distribution above.)26. Weiss’s paint store uses a reorder point inventory system to control its stock levels. For a particularly popular white latex paint, historical data show that the distribution of monthly demand is approximately normal, with mean 28 and standard…arrow_forwardHelp me understand how to do this questionarrow_forward
- A newsvendor orders 8000 units. Demand is normally distributed with a mean of9000 and a standard deviation of 2000. What is the stockout probability?arrow_forwardI will upvote if solved correctlyarrow_forward12. A restaurant uses an average of 8 jars of a special sauce every day. When they place an order, the jars arrive to the restaurant in a day (lead time is 1 day). Daily usage of sauce has a standard deviation of 3 jars. They think their demand during the lead time can be modelled with normal distribution. The manager is willing to accept no more than a 10 percent risk of stockout during lead time. Calculate at which level of inventory a new order needs to be placed (i.e. calculate the reorder-point(ROP)).arrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,