After graduation, you decide to go into a partnership in an office supply store that has existed for a number of years. Walking through the store and stockrooms, you find a great discrepancy in service levels. Some spaces and bins for items are completely empty; others have supplies that are covered with dust and have obviously been there a long time. You decide to take on the project of establishing consistent levels of inventory to meet customer demands. Most of your supplies are purchased from just a few distributors that call on your store once every two weeks. You choose, as your first item for study, computer printer paper. You examine the sales records and purchase orders and find that demand for the past 12 months was 5,000 boxes. Using your calculator, you sample some days' demands and estimate that the standard deviation of daily demand is 10 boxes. You also search out these figures: Cost per box of paper: $11 Desired service probability: 98 percent Store is open every day. Salesperson visits every two weeks. Delivery time following visit is three days. Using your procedure, how many boxes of paper would be ordered if, on the day the salesperson calls, 60 boxes are on-hand? Note: Use 365 days a year. Use Excel's NORM.S.INV() function to find the z value. 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...
icon
Related questions
icon
Concept explainers
Question

After graduation, you decide to go into a partnership in an office supply store that has existed for a number of years. Walking through the store and stockrooms, you find a great discrepancy in service levels. Some spaces and bins for items are completely empty; others have supplies that are covered with dust and have obviously been there a long time. You decide to take on the project of establishing consistent levels of inventory to meet customer demands. Most of your supplies are purchased from just a few distributors that call on your store once every two weeks.

You choose, as your first item for study, computer printer paper. You examine the sales records and purchase orders and find that demand for the past 12 months was 5,000 boxes. Using your calculator, you sample some days' demands and estimate that the standard deviation of daily demand is 10 boxes. You also search out these figures:

Cost per box of paper: $11

Desired service probability: 98 percent

Store is open every day.

Salesperson visits every two weeks.

Delivery time following visit is three days.

Using your procedure, how many boxes of paper would be ordered if, on the day the salesperson calls, 60 boxes are on-hand?

Note: Use 365 days a year. Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places and final answer to the nearest whole number.

 
 
 
 
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 6 images

Blurred answer
Knowledge Booster
Introduction to Business messages
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.