a. Determine the order quantity. (Round your answer to the nearest whole number.) Order quantity 75 tires b. Determine the reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given a-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)

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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Problem 20-30 (Algo)
It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for
the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 x 14 BSW. A
perpetual inventory system has been used, so you examine this, as well as other records, and come up with the following data:
Cost per tire
Holding cost
Demand
50 each
25 percent of tire cost per year
1,100 рer year
Ordering cost
Standard deviation of daily demand
Delivery lead time
32 per order
7 tires
8 days
Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 90 percent. Assume the
demand occurs 365 days per year.
a. Determine the order quantity. (Round your answer to the nearest whole number.)
Order quantity
75 tires
b. Determine the reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given a-level. Do not
round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)
Reorder point
tires
Transcribed Image Text:Problem 20-30 (Algo) It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 x 14 BSW. A perpetual inventory system has been used, so you examine this, as well as other records, and come up with the following data: Cost per tire Holding cost Demand 50 each 25 percent of tire cost per year 1,100 рer year Ordering cost Standard deviation of daily demand Delivery lead time 32 per order 7 tires 8 days Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 90 percent. Assume the demand occurs 365 days per year. a. Determine the order quantity. (Round your answer to the nearest whole number.) Order quantity 75 tires b. Determine the reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given a-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.) Reorder point tires
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