Practical Operations Management
2nd Edition
ISBN: 9781939297136
Author: Simpson
Publisher: HERCHER PUBLISHING,INCORPORATED
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Chapter 4, Problem 22P
Summary Introduction
Interpretation: Based on the
Concept Introduction: The procedure of predicting the future value on the basis of the previous prediction and a segment of the errors in the earlier prediction is called as Simple exponential smoothing forecast.
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Your firm uses a periodic review system for all SKUS classified, using ABC analysis, as B or C
items. Further, it uses a continuous review system for all SKUS classified as A items. The
demand for a specific SKU, currently classified as an A item, has been dropping. You have been
asked to evaluate the impact of moving the item from continuous review to periodic review.
Assume your firm operates 52 weeks per year; the item's current characteristics are:
Demand (D) = 15,080 units/year
Ordering cost (S) = $125.00/order
Holding cost (H) = $3.00/unit/year
Lead time (L) = 5 weeks
Cycle service level = 95 percent
Demand is normally distributed, with a standard deviation of weekly demand of 64 units.
-Calculate the item's EOQ.
- Use the EOQ to define the parameters of an appropriate continuous review and periodie
review system for this item.
-Which system requires more safety stock and by how much?
-How do you think each system can affect your procurement procedures/methods?
Your firm uses a periodic review system for all SKUS classified, using ABC analysis, as B or C
items. Further, it uses a continuous review system for all SKUS classified as A items. The
demand for a specific SKU, currently classified as an A item, has been dropping. You have been
asked to evaluate the impact of moving the item from continuous review to periodic review.
Assume your firm operates 52 weeks per year; the item's current characteristics are:
Demand (D) = 15,080 units/year
Ordering cost (S) = $125.00/order
Holding cost (H) = $3.00/unit/year
Lead time (L) = 5 weeks
Cycle service level = 95 percent
Demand is normally distributed, with a standard deviation of weekly demand of 64 units.
1- How do you think each system can affect your procurement procedures/methods?
Problem 20-10 (Algo)
You are a newsvendor selling San Pedro Times every morning. Before you get to work, you go to the printer and buy the day's paper
for $0.30 a copy. You sell a copy of San Pedro Times for $1.10. Daily demand is distributed normally with mean = 265 and standard
deviation = 53. At the end of each morning, any leftover copies are worthless and they go to a recycle bin.
a. How many copies of San Pedro Times should you buy each morning? (Use Excel's NORMSINV() function to find the correct critical
value for the given a-level. Round your z-value to 2 decimal places and final answer to to 2 decimal places.)
Optimal order quantity
b. Based on a, what is the probability that you will run out of stock? (Round your answer to the nearest whole number.)
Probability
Chapter 4 Solutions
Practical Operations Management
Ch. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6P
Ch. 4 - Prob. 7PCh. 4 - Prob. 8PCh. 4 - Prob. 9PCh. 4 - Prob. 10PCh. 4 - Prob. 11PCh. 4 - Prob. 12PCh. 4 - Prob. 13PCh. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19PCh. 4 - Prob. 20PCh. 4 - Prob. 21PCh. 4 - Prob. 22PCh. 4 - Prob. 23PCh. 4 - Prob. 24PCh. 4 - Prob. 25PCh. 4 - Prob. 26PCh. 4 - Prob. 27PCh. 4 - Prob. 28PCh. 4 - Prob. 29PCh. 4 - Prob. 30PCh. 4 - Prob. 31PCh. 4 - Prob. 32PCh. 4 - Prob. 1.1QCh. 4 - Prob. 1.2QCh. 4 - Prob. 1.3QCh. 4 - Prob. 1.4QCh. 4 - Prob. 2.1QCh. 4 - Prob. 2.2QCh. 4 - Prob. 2.3QCh. 4 - Prob. 2.4QCh. 4 - Prob. 3.1QCh. 4 - Prob. 3.2QCh. 4 - Prob. 3.3Q
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