Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Problem 6
The planned weekly demand for new components from a German manufacturer is 5,000 units. The
standard deviation is unknown, one estimate is 100 units per week (very stable demand), the other 1,000
units per week (very volatile demand). The weight and cost per unit is 2lbs and $10 respectively. The
holding cost rate is 30% and the TSL = 99.5% (Z = 2.576). Assume operations take place 52 weeks per
year. Assume 2 weeks of production/prep lead time with a standard deviation of 0 days; ordering costs
are $1,000 per order. In both cases, the shipping quantity will be 20,000 units (a container load).
●
GMX. Transit time is 4 weeks, standard deviation of 1 week. The rate per CL is $3,200.
NHK. Transit time is 4 weeks, standard deviation of 0.5 weeks. The rate per CL is $4,600.
What is the recommendation for each of the two values for the standard deviation?
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Transcribed Image Text:Problem 6 The planned weekly demand for new components from a German manufacturer is 5,000 units. The standard deviation is unknown, one estimate is 100 units per week (very stable demand), the other 1,000 units per week (very volatile demand). The weight and cost per unit is 2lbs and $10 respectively. The holding cost rate is 30% and the TSL = 99.5% (Z = 2.576). Assume operations take place 52 weeks per year. Assume 2 weeks of production/prep lead time with a standard deviation of 0 days; ordering costs are $1,000 per order. In both cases, the shipping quantity will be 20,000 units (a container load). ● GMX. Transit time is 4 weeks, standard deviation of 1 week. The rate per CL is $3,200. NHK. Transit time is 4 weeks, standard deviation of 0.5 weeks. The rate per CL is $4,600. What is the recommendation for each of the two values for the standard deviation?
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