Tobacco is shipped from North Carolina to a cigarette manufacturer in Cambodia once a year. The reorder point, withoutsafety stock, is 200 kilos. The carrying cost is $15 per kilo per year, and the cost of a stockout is $65 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)0100200300400Probability0.10.10.20.40.2The optimal quantity of safety stock which minimizes expected total cost is 100 kilos (enter your response as awhole number).

Safety stock refers to the additional inventory or stock held by a company beyond its average demand…

Answered: The optimal quantity of safety stock…

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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Annual demand is 16000 units, cost per order is $75 and carrying cost per unit as a percentage is 10%. The company works 250 weeks a year; the lead-time on all orders placed is 6 working days. Assuming constant lead-time demand, and a unit cost of $45 what is the economic order quantity? What is the reorder point. If lead-time demand shows variability that follows a normal distribution with a mean μ =420 and a standard deviation σ =20, what will the revised reorder point if two stock-outs (shortages) are allowed? What is the company’s reorder point if the probability of a stock-out on any cycle is restricted to 0.05?
Alina Limited is a manufacturer of widgets orders components for use in manufacturing. The estimated demand for the components during the coming year is 15,000. Order costs are $100 per order; carrying costs are $12 per component. Using the economic order quantity model What is Alina Ltd’s optimum order quantity? If the supplier guarantees a three (3) day delivery on any order that is placed, What is the re-order point?
Suppose that the retailer SnowInc buys ski jackets from the Chinese manufacturerJacketCo. Due to the short selling season and long delivery lead time for this fashiongood, this is a one-time purchase decision. SnowInc estimates the season’s demand forone type of jacket to be normally distributed with mean 500 and standard deviation 100.Retail price for the jacket is $100. If not sold at the end of the season they unload themfor $10 per jacket. The wholesale price JacketCo charges is $30 per jacket and JacketCo’sper unit manufacturing cost is $12. How many jackets should SnowInc order and what arethe two firms’ profits? If both firms were owned by the same company, how would theseanswers change?
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?
That One Book sells its books through The Witch and the Wardrobe bookstores. It costs That One Book $0.80 to print each book; it sells the book to The Witch and the Wardrobe for $2.50. The Witch and the Wardrobe then sells the books at retail for $6.00. Whatever doesn’t sell gets thrown away. Demand for the book each issue is normal with a mean of 5219 and a standard deviation of 1610. To give The Witch and the Wardrobe incentive to order more books, it proposes a revenue-sharing contract. Instead of selling the book to The Witch and the Wardrobe for $2.50, That One Book will sell its books to The Witch and the Wardrobe for only $1.00. However, for each book that The Witch and the Wardrobe sells at retail, The Witch and the Wardrobe must give $2.00 back to That One Book. With this revenue sharing agreement in place, what is the optimal order amount that will maximize The Witch and the Wardrobe expected profit? Please do fast ASAP
The manager of an auto parts store is reviewing the inventory policy for one of their fastest selling products — car batteries. The store sells an average of 40 car batteries every week. The cost to hold one battery in inventory for a year is $15. The ordering cost per order is estimated at $50. The store operates all 52 weeks in a year.Use the information in Scenario 9.5. If the manager decides to order at the economic order quantity, what is the sum of the annual ordering cost and holding cost? Group of answer choices greater than $1800 but less than or equal to $2100
A sport clothing store sells a popular baseball team cap and classifies it as an A category item. The cap has a normally distributed monthly demand of 500 units (average). The standard deviation of the monthly demand is 12. The cap costs $10 a unit and sells for $15 a unit. The cost of capital for the store is 8% per year. The shipment against a replenishment order is received after 10 days of placing the order with the supplier. Each shipment from the supplier costs $20 in delivery charges and half an hour of staff’s time for storage. Staff is paid $16 an hour. What is the optimum order quantity and the reorder point for the cap if the store desires a 98% service level during the lead time? (Assume 30 days in a month. You can completely round the answers to the closest integer.)
Demand for your product averages 20 units per day, with a standard deviation of 4. Your lead time is 5 days. What should your reorder point be, if you want to have a 95% chance of not running out of products during the lead time? With this reorder level, how much safety stock do you have?
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Bads, Inc., sells an average of 1,000 food processors each year. Each order for foodprocessors placed by Bads costs $50. The lead time is one month. It costs $10 to hold afood processor in inventory for one year. Annual demand for food processors is normallydistributed, with a standard deviation of 69.28. For each of the following values of SLM1,determine the reorder point: 80%, 90%, 95%, 99%, 99.9%.
I need a detailed explanation on how to solve this problem: A paint shop implements an inventory policy on its stock of white paint, which costs the store $6 per can. Monthly demand for cans of white paint is normal with mean 28 and standard deviation 8. The replenishment lead time is 14 weeks. Excess demand is backordered, but costs $10 per back ordered can in labor and loss of goodwill. There is a fixed cost of $15 per order, and the holding cost is based on 30% interest rate per annum. In your computations, assume 4 weeks per month. - Write down the model name and parameters. - What are the optimal lot size and reorder points for white paint (include the formulas)? - What is the optimal safety stock (include the formula)? *** Suppose the paint shop from the above problem adopts a service level policy. - What are the optimal lot size and reorder points for white paint, such that 90% of the cycles are filled without backordering (include all formulas)? - What is the fill rate…
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The optimal quantity of safety stock which minimizes expected total cost is 100 kilos (enter your response as a whole number).