Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Ch12 #32-Please assist me with answering a, b and c.  Please provide step by step instructions as to how you arrive at each answer. Please do not skip steps as the process is important.

32. A manager must set up inventory ordering systems for two new production items: P34 and P35. P34 can be
ordered at any time, but P35 can be ordered only once every 4 weeks. The company operates 50 weeks a
year, and the weekly usage rates for both items are normally distributed. The manager has gathered the
following information about the items.
Item P34
Average weekly demand 60 units
Standard deviation
Unit cost
Annual holding cost
Ordering cost
Lead time
70 units
4 units per week 5 units per week
$15
$20
30%
30%
$70
$30
2 weeks
2 weeks
2.5%
Item P35
Acceptable stockout risk 2.5%
a. When should the manager reorder each item?
b. Compute the order quantity for P34.
c. Compute the order quantity for P35 if 110 units are on hand at the time the order is placed.
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Transcribed Image Text:32. A manager must set up inventory ordering systems for two new production items: P34 and P35. P34 can be ordered at any time, but P35 can be ordered only once every 4 weeks. The company operates 50 weeks a year, and the weekly usage rates for both items are normally distributed. The manager has gathered the following information about the items. Item P34 Average weekly demand 60 units Standard deviation Unit cost Annual holding cost Ordering cost Lead time 70 units 4 units per week 5 units per week $15 $20 30% 30% $70 $30 2 weeks 2 weeks 2.5% Item P35 Acceptable stockout risk 2.5% a. When should the manager reorder each item? b. Compute the order quantity for P34. c. Compute the order quantity for P35 if 110 units are on hand at the time the order is placed.
32. A manager must set up inventory ordering systems for two new production items: P34 and P35. P34 can be
ordered at any time, but P35 can be ordered only once every 4 weeks. The company operates 50 weeks a
year, and the weekly usage rates for both items are normally distributed. The manager has gathered the
following information about the items.
Item P34
Average weekly demand 60 units
Standard deviation
Unit cost
Annual holding cost
Ordering cost
Lead time
70 units
4 units per week 5 units per week
$15
$20
30%
30%
$70
$30
2 weeks
2 weeks
2.5%
Item P35
Acceptable stockout risk 2.5%
a. When should the manager reorder each item?
b. Compute the order quantity for P34.
c. Compute the order quantity for P35 if 110 units are on hand at the time the order is placed.
expand button
Transcribed Image Text:32. A manager must set up inventory ordering systems for two new production items: P34 and P35. P34 can be ordered at any time, but P35 can be ordered only once every 4 weeks. The company operates 50 weeks a year, and the weekly usage rates for both items are normally distributed. The manager has gathered the following information about the items. Item P34 Average weekly demand 60 units Standard deviation Unit cost Annual holding cost Ordering cost Lead time 70 units 4 units per week 5 units per week $15 $20 30% 30% $70 $30 2 weeks 2 weeks 2.5% Item P35 Acceptable stockout risk 2.5% a. When should the manager reorder each item? b. Compute the order quantity for P34. c. Compute the order quantity for P35 if 110 units are on hand at the time the order is placed.
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