Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (12th Edition)
Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134855424
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Chapter 9, Problem 19P

You are in charge of inventory control of a highly successful product retailed by your firm. Weekly demand for this item varies, with an average of 200 units and a standard deviation of 16 units. It is purchased from a wholesaler at a cost of $12.50 per unit. You are using a continuous review system to control this inventory. The supply lead time is 4 weeks. Placing an order costs $50, and the inventory carrying rate per year is 20 percent of the item’s cost. Your firm operates 5 days per week, 50 weeks per year.

  1. What is the optimal ordering quantity for this item?
  2. How many units of the item should be maintained as safety stock for 99 percent protection against stock-outs during an order cycle?
  3. If supply lead time can be reduced to 2 weeks, what is the percent reduction in the number of units maintained as safety stock for the same 99 percent stockout protection?
  4. If through appropriate sales promotions, the demand variability is reduced so that the standard deviation of weekly demand is 8 units instead of 16, what is the percent reduction (compared to that in part b) in the number of units maintained as safety stock for the same 99 percent stockout protection?

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You are in charge of inventory control of a highly successful product retailed by your firm. Weekly demand for this item varies, with an average of 200 units and a standard deviation of 16 units. It is purchased from a wholesaler at a cost of $12.50 per unit. You are using a continuous review system to control this inventory. The supply lead time is 4 weeks. Placingan order costs $50, and the inventory carrying rate per year is 20 percent of the item’s cost. Your firm operates 5 days per week, 50 weeks per year.a. What is the optimal ordering quantity for this item?b. How many units of the item should be maintained as safety stock for 99 percent protection against stockouts during an order cycle?c. If supply lead time can be reduced to 2 weeks, what is the percent reduction in the number of units maintained as safety stock for the same 99 percent stockout protection?d. If through appropriate sales promotions, the demand variability is reduced so that the standard deviation of weekly…
You are in charge of inventory control of a highly successful product retailed by your firm. Weekly demand for this item​ varies, with an average of 350 units and a standard deviation of 15 units. It is purchased from a wholesaler at a cost of ​$25.00 per unit. The supply lead time is 7 weeks. Placing an order costs ​$55.00​, and the inventory carrying rate per year is 15 percent of the​ item's cost. Your firm operates 6 days per​ week, 50 weeks per year. Refer to the standard normal table The table below shows the total area under the normal curve for a point that is Z standard deviations to the right of the mean.   Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.0 0.5000 0.5040 0.5080 0.5120 0.5160 0.5199 0.5239 0.5279 0.5319 0.5359 0.1 0.5398 0.5438 0.5478 0.5517 0.5557 0.5596 0.5636 0.5675 0.5714 0.5754 0.2 0.5793 0.5832 0.5871 0.5910 0.5948 0.5987 0.6026 0.6064 0.6103 0.6141…
A retailer uses a periodic review order-up-to model to control the inventory of one of its high volume products. Average demand is 2580 units per week with a standard deviation of 1270. The review period is 5 weeks, the lead time is 11 weeks, and the safety factor used is 0.61. How many stockouts should the retailer expect for this product next year?

Chapter 9 Solutions

Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (12th Edition)

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