Suppose that reorder point is r = 40, order quantity is q = EOQ = 100, average annual demand is 1,200 units, and the lead time demand is a random variable having the distribution shown in the following table. Lead time Demand Probability 20 0.10 30 0.15 40 0.15 50 0.20 60 0.15 70 0.15 80 0.10 For each question below select from the drop-down list. a) What is the expected shortages (units) in a year? Answer = Answer b) What is the percentage of demand that is met on time? Answer = Answer c)What is the expected number of cycles in which no shortages occur? Answer =
Continuous Probability Distributions
Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.
Normal Distribution
Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!
Suppose that reorder point is r = 40, order quantity is q = EOQ = 100, average annual demand is 1,200 units, and the lead time demand is a random variable having the distribution shown in the following table.
Lead time Demand
20
0.10
30
0.15
40
0.15
50
0.20
60
0.15
70
0.15
80
0.10
For each question below select from the drop-down list.
a) What is the expected shortages (units) in a year? Answer = Answer
b) What is the percentage of demand that is met on time? Answer = Answer
c)What is the expected number of cycles in which no shortages occur? Answer =
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