
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Question
Just need f.
Average weekly demand (52 weeks per year): |
71 printers |
|
Standard deviation of weekly demand: |
19 printers |
|
Order lead time: |
5 weeks |
|
Standard deviation of order lead time: |
0 (lead times are constant) |
|
Item cost: |
$170 per printer |
|
Cost to place an order: |
$5 |
|
Yearly holding cost per printer: |
$39 |
|
Desired service level during reordering period: |
95% (z=1.65) |

Transcribed Image Text:One of the products sold by OfficeMax is a Hewlett-Packard LaserJet Z99 printer. As
purchasing manager, you have the following information for the printer:
i Click the icon to view the information for the printer.
a. The EOQ is 31 (Enter your response rounded to the nearest whole number.)
b. The annual ordering costs and holding costs (ignoring safety stock) for the EOQ is $ 1,199.
(Enter your response rounded to the nearest dollar.)
c. Suppose OfficeMax currently orders 170 printers at a time.
OfficeMax would pay $ 2006 less in holding and ordering costs per year if it ordered just 17
printers at a time. (Enter your response rounded to the nearest dollar.)
d. The reorder point for the printer is 426 printers. (Enter your response rounded up to the
nearest whole number.)
The safety stock for the printer is 71 printers. (Enter your response rounded up to the nearest
whole number.)
e. Use the following formula to consider the impact of safety stock (SS) on average inventory
levels and annual holding costs:
(2 + SSH
The annual inventory holding cost, including the safety stock, is $6,084. (Enter your response
rounded to the nearest dollar.)
The annual safety stock holding cost is $ 2,769. (Enter your response rounded to the
nearest dollar.)
f. Suppose OfficeMax is able to cut the lead time to a constant 3 weeks.
The new safety stock level is
whole number.)
(Enter your response rounded up to the nearest
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