Problem #4 - Hinsdale Company - Modified, from textbook page #205. a. I 400 units and standard deviation of 12. If Hinsdale cannot have stockouts In more than 10% of the time in any order, how much safety stock should be maintained and at what reorder point? Item SKU A3378 has a demand that Is normally distributed during the lead time, with a mean of b. Calculate Hinsdale's safety stock and reorder point for three other SKUS under the following conditions of demand and lead time: SKU F5402: daily demand is normally distributed with a mean of 20, standard deviation of 5, lead time is 5 days, and must operate at a 95% service level. SKU B7319: daily demand is constant at 28 units per day, lead time is normally with a mean of 7 days and standard deviation of 4 days and must operate at a 97% service level. SKU F9004: daily demand is normally distributed with a mean of 22 units and a standard deviation of 5 days. The lead time is also normally distributed with a mean of 6 days, standard deviation of 3 days and a service level of 90% is required. Page 4 of 4 Scanned with CamScanner

Problem #4 - Hinsdale Company - Modified, from textbook page #205. a. I 400 units and standard deviation of 12. If Hinsdale cannot have stockouts In more than 10% of the time in any order, how much safety stock should be maintained and at what reorder point? Item SKU A3378 has a demand that Is normally distributed during the lead time, with a mean of b. Calculate Hinsdale's safety stock and reorder point for three other SKUS under the following conditions of demand and lead time: SKU F5402: daily demand is normally distributed with a mean of 20, standard deviation of 5, lead time is 5 days, and must operate at a 95% service level. SKU B7319: daily demand is constant at 28 units per day, lead time is normally with a mean of 7 days and standard deviation of 4 days and must operate at a 97% service level. SKU F9004: daily demand is normally distributed with a mean of 22 units and a standard deviation of 5 days. The lead time is also normally distributed with a mean of 6 days, standard deviation of 3 days and a service level of 90% is required. Page 4 of 4 Scanned with CamScanner

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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Describe the difference between a fixed-quantity (Q) anda fixed-period (P) inventory system.
Given this information:Lead-time demand 600 poundsStandard deviation of lead time demand 52 pounds (Assume normality.)Acceptable stockout risk during lead time 4 percenta. What amount of safety stock is appropriate?b. When should this item be reordered?c. What risk of stockout would result from a decision not to have any safety stock?
Please show work so I can understand it. Given this information: •Expected demand during lead time = 800 units • Standard deviation of lead time demand = 40 units Assuming that lead time demand is distributed normally. The risk of stockout is 5 percent during lead time (a) What amount of safety stock is appropriate? (b) Calculate ROP
.. 12.41 Barbara Flynn is in charge of maintaining hospital supplies at General Hospital. During the past year, the mean lead time demand for bandage BX-5 was 60 (and was normally distributed). Furthermore, the standard deviation for BX-5 was 7. Ms. Flynn would like to maintain a 90% service level. a) What safety stock level do you recommend for BX-5? b) What is the appropriate reorder point? PX ..12.42 Based on available information, lead time demand for PC jump drives averages 50 units (normally distributed), with a stand- ard deviation of 5 drives. Management wants a 97% service level. a) What value of Z should be applied? b) How many drives should be carried as safety stock? c) What is the appropriate reorder point? Px ... 12.43 Authentic Thai rattan chairs (shown in the photo) are delivered to Gary Schwartz's chain of retail stores, called The Kathmandu Shop, once a year. The reorder point, without safety stock, is 200 chairs. Carrying cost is $30 per unit per year, and the cost…
Q 1 Super K Beverage Company distributes a soft drink that has a constant annual demand rate of 4,600 cases. A 12-pack case of the soft drink costs Super K $2.25. Ordering costs are $20 per order, and inventory-holding costs are charged at 25 percent of the cost per unit. There are 250 working days per year, and the lead time is four days. Find the economic order quantity and total annual cost, and compute the reorder point. Q 2 Environmental considerations, material losses, and waste disposal can be included in the EOQ model to improve inventory management decisions. Assume that the annual demand for an industrial chemical is 1,200 lb, item cost is $5/lb, order cost is $40, inventory-holding cost rate (percent of item cost) is 18 percent. Q3 An insurance claims work area has five claims waiting for processing as follows. Job Processing Time Due Date (Di) 1 22 35 2…
EOQ, reorder point, and safety stock Alexis Company uses 916 units of a product per year on a continuous basis. The product has a fixed cost of $60 per order, and its carrying cost is $3 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity. a. Alexis' EOQ is units. (Round to the nearest whole number.)
A gift shop sells Little Lentils dolls at a steady pace of 10 per day, 310 days per year. The cost of the dolls is $5, and the gift shop uses an annual interest rate of 20 percent to compute holding cost. Question 1: Assuming an order quantity of 250 dolls and the cost of placing an order of $10, what is the average annual ordering cost (cost to place orders, not purchasing cost)? Question 2: Assuming an order quantity of 250 dolls, what is the average annual inventory holding cost?
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…
4. A beer store uses a (Q, R) inventory system to control its stock levels. For a particularly popular black ale (a type of beer), historical data shows that the distribution of weekly demand is approximately normal, with mean 7 and standard deviation 2. Replenishment lead time for this beer store is about 5 weeks. Each unit of this beer costs the store $60. Although excess demands are back-ordered, the store owner estimates that unfilled demands cost about $100 per unit in bookkeeping and loss-of-goodwill costs. Fixed costs of replenishment are $150 per order, and holding costs are based on a 30% annual rate of interest. Assume each month is equivalent to 4 weeks. (a) What are the optimal lot sizes and reorder points for this beer? (b) What is the optimal safety stock for this beer? (c) What if the unfilled demands now incur a penalty cost of $75 per unit beer per week?
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 Ordering cost Standard deviation of daily demand Delivery lead time Order quantity $ tires 50 each percent of tire cost per year 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.) 15 1,100 per year $ 22 per order 4 tires 5 days
Describe what is safety stock and what it provides safety against in inventory management ?
Suzuki is a company that manufactures motorcycles. It produces 450 motorcycles a month. It buys tyres for motorcycles from Dunlop at a cost of $20 per tyre. The company’s inventory carrying cost per tyre is estimated to be 15% of the cost per tyre. The cost per order is calculated at 250% of the cost per tyre. Rquirement: i) Calculate the EOQ. ii) Determine the number of orders per year? iii) Compute the total cost.