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Ned's Natural Foods sells unshelled peanuts by the pound. Historically, Ned has observed that daily demand is normally distributed with a mean of 80 pounds and a standard deviation of 26 pounds. Lead time also appears normally distributed with a mean of 8 days and a standard deviation of oL. Suppose one year has 365 days. The ordering cost is $600, and the inventory carrying cost is $1.2/pound/year. 1. Suppose o1, = 1 day and Ned aims to limit the stockout risk during lead time to 3.5 percent. At what level of inventory should the manager place an order?

Ned's Natural Foods sells unshelled peanuts by the pound. Historically, Ned has observed that daily demand is normally distributed with a mean of 80 pounds and a standard deviation of 26 pounds. Lead time also appears normally distributed with a mean of 8 days and a standard deviation of oL. Suppose one year has 365 days. The ordering cost is $600, and the inventory carrying cost is $1.2/pound/year. 1. Suppose o1, = 1 day and Ned aims to limit the stockout risk during lead time to 3.5 percent. At what level of inventory should the manager place an order?

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.5: Comparing Sets Of Data
Problem 13PPS
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Ned's Natural Foods sells unshelled peanuts by the pound. Historically, Ned has observed that daily demand is normally distributed with a mean of 80 pounds and a standard deviation of 26 pounds. Lead time also appears normally distributed with a mean of 8 days and a standard deviation of o1. Suppose one year has 365 days. The ordering cost is $600, and the inventory carrying cost is $1.2/pound/year. 1. Suppose oL = 1 day and Ned aims to limit the stockout risk during lead time to 3.5 percent. At what level of inventory should the manager place an order? 2. Suppose Ned uses a reorder point of 900 pounds and the service level is 88.1 percent. Then what is the standard deviation of lead time (oL)?
Transcribed Image Text:Ned's Natural Foods sells unshelled peanuts by the pound. Historically, Ned has observed that daily demand is normally distributed with a mean of 80 pounds and a standard deviation of 26 pounds. Lead time also appears normally distributed with a mean of 8 days and a standard deviation of o1. Suppose one year has 365 days. The ordering cost is $600, and the inventory carrying cost is $1.2/pound/year. 1. Suppose oL = 1 day and Ned aims to limit the stockout risk during lead time to 3.5 percent. At what level of inventory should the manager place an order? 2. Suppose Ned uses a reorder point of 900 pounds and the service level is 88.1 percent. Then what is the standard deviation of lead time (oL)?
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