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d. (**) Now suppose the supplier of workbenches guarantees KraftyCity that the lead time will be a constant 3 weeks, with no variability (i.e., standard deviation of lead time = 0). Recalculate the reorder point, using the demand and service level information in problem 30-60. Is the reorder point higher or lower? Explain why.

d. (**) Now suppose the supplier of workbenches guarantees KraftyCity that the lead time will be a constant 3 weeks, with no variability (i.e., standard deviation of lead time = 0). Recalculate the reorder point, using the demand and service level information in problem 30-60. Is the reorder point higher or lower? Explain why.

College Algebra (MindTap Course List)
College Algebra (MindTap Course List)
12th Edition
ISBN:9781305652231
Author:R. David Gustafson, Jeff Hughes
Publisher:R. David Gustafson, Jeff Hughes
Chapter6: Linear Systems
Section6.8: Linear Programming
Problem 5SC: If during the following year it is predicted that each comedy skit will generate 30 thousand and...
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4. KraftyCity is a large retailer that sells power tools and other hardware supplies. One of its products is the KraftyMan workbench. Information on the workbench is as follows: 1,200 $15 per year = : $200 per order Annual demand = Holding cost Ordering cost = a. (*) What is the economic order quantity for the workbench? b. (**) Suppose that KraftyCity has to pay $50 per workbench for orders under 200 but only $42 per workbench for orders of 201 or more. Using the information provided in problem 30-40, what order quantity should KraftyCity use? c. (*) The lead time for KraftyCity workbenches is 3 weeks, with a standard deviation of 1.2 weeks, and the average weekly demand is 24, with a standard deviation of 8 workbenches. What should the reorder point be if KraftyCity wants to provide a 95% service level? d. (**) Now suppose the supplier of workbenches guarantees KraftyCity that the lead time will be a constant 3 weeks, with no variability (i.e., standard deviation of lead time = 0). Recalculate the reorder point, using the demand and service level information in problem 3-6. Is the reorder point higher or lower? Explain why.
Transcribed Image Text:4. KraftyCity is a large retailer that sells power tools and other hardware supplies. One of its products is the KraftyMan workbench. Information on the workbench is as follows: 1,200 $15 per year = : $200 per order Annual demand = Holding cost Ordering cost = a. (*) What is the economic order quantity for the workbench? b. (**) Suppose that KraftyCity has to pay $50 per workbench for orders under 200 but only $42 per workbench for orders of 201 or more. Using the information provided in problem 30-40, what order quantity should KraftyCity use? c. (*) The lead time for KraftyCity workbenches is 3 weeks, with a standard deviation of 1.2 weeks, and the average weekly demand is 24, with a standard deviation of 8 workbenches. What should the reorder point be if KraftyCity wants to provide a 95% service level? d. (**) Now suppose the supplier of workbenches guarantees KraftyCity that the lead time will be a constant 3 weeks, with no variability (i.e., standard deviation of lead time = 0). Recalculate the reorder point, using the demand and service level information in problem 3-6. Is the reorder point higher or lower? Explain why.
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