Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
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Chapter 14, Problem 8CQ
Summary Introduction
To identify: The target in-stock probability.
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1- The number of orders in the inventory system (called A) is total demand (called D) divided
D
by order size per replenishment (called S) or A =". D follows a normal distribution with
a mean of 100,000 and standard deviation of 5000. While S is a continuous uniform
distribution between 20,000 and 30,000. Generate 500 A random number and find the
average.
If the target in-stock probability increases, then the expected time between stockouts: a. increases.b. remains the same.c. decreases.d. could increase or decrease.
Please do not give solution in image formate thanku.
A product’s demand over (l + 1) periods is normally distributed with a mean of 100 and standard deviation of 10. Lead time is 2 periods. The order-up-to model is used to manage inventory. If in-stock probability stays at 99%, what will happen to expected on-hand inventory when expected demand increases to 200?
A) It will increase.
B) It will stay the same.
C) It will decrease.
D) It may either increase or decrease.
Chapter 14 Solutions
Operations Management
Ch. 14 - Demand in each period follows the same normal...Ch. 14 - Prob. 2CQCh. 14 - For products with slow-moving demandfor example,...Ch. 14 - Prob. 4CQCh. 14 - Prob. 5CQCh. 14 - Prob. 6CQCh. 14 - Prob. 7CQCh. 14 - Prob. 8CQCh. 14 - If the target in-stock probability increases, then...Ch. 14 - Prob. 10CQ
Ch. 14 - Prob. 11CQCh. 14 - Prob. 12CQCh. 14 - Prob. 13CQCh. 14 - Prob. 14CQCh. 14 - Prob. 15CQCh. 14 - Prob. 16CQCh. 14 - Prob. 17CQCh. 14 - Prob. 18CQCh. 14 - Prob. 19CQCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - You are the owner of Hotspices.com, an online...Ch. 14 - Prob. 5PACh. 14 - Prob. 6PACh. 14 - Prob. 7PACh. 14 - Prob. 1CCh. 14 - Prob. 2CCh. 14 - Prob. 3CCh. 14 - CASE WARKWORTH FURNITURE1 Warkworth Furniture...Ch. 14 - CASE WARKWORTH FURNITURE1 Warkworth Furniture...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- Demand in each period follows the same normal distribution (i.e., there is one demand distribution that represents demand in any single period). Assuming demand is independent acrossperiods, which of the following statements about mean demand over five periods is true? a. It equals the mean of demand over one period.b. It is greater than the mean of demand over one period but less than five times the meanof demand over one period.c. It equals five times the mean of demand over one period.d. It is even more than five times the mean of demand over one period.arrow_forwardXYZ Company must order tires from its warehouse. It costs $10400 to place an order and to review the inventory level. Annual tire sales are normally distributed with mean 18000 and variance 4,000,000. It costs $8 per year to hold a tire in inventory, and each order arrives two weeks after being placed. The Company uses periodic review (R, S) policy. What is the review interval R (in years), estimated using EOQ.? Select one: a. 0.3801 b. 0.19 c. 0.2687 d. 1.075 e. 0.1267arrow_forwardFor a company operating 300 days a year, the annual demand is 63,000 units, the lead time is 4 days, the ordering cost per order is BD 80 and the inventory turnover is 12, the reorder point is A. Every 12 days B. Every 4 days C. When 175 units remain D. When 840 units remainarrow_forward
- The manager of a local retail store is ordering a specialty item from a supplier in Toronto. The lead time is cons days. The store is open 300 days a year (50 weeks Monday-Saturday, with a two-week vacation). The average. is 40 units, with a standard deviation of 7.6. (Assume that the distribution is approximately normal.) It costs $40 to place an Time left 1:45:28 order, and the annual holding cost is 30% of the inventory value. The supplier charges $8.00 per unit. Find the economic order quantity (EOQ). O a. 1788 O b. 346 O c. 36 Od. 632 The manager of a local retail store is ordering a specialty item from a supplier in Toronto. The lead time is constant at five days. The store is open 300 days a year (50 weeks Monday-Saturday, with a two-week vacation). The average daily demand is 40 units, with a standard deviation of 7.6. (Assume that the distribution is approximately normal) It costs $40 to place an order, and the annual holding cost is 30% of the inventory value. The supplier…arrow_forwardWhich of the following statements is FALSE of a fixed-quantity system (FQS)? Select one: a. In FQS, fixed quantity is ordered to bring the inventory position up to the replenishment level. b. In FQS with uncertain demand, the reorder point is chosen to include the demand during lead time, plus any safety stock. c. In FQS, inventory position is checked continuously, rather than at fixed intervals of time. d. In FQS, orders are placed when the inventory position reaches or drops below the reorder point. e. In FQS with uncertain demand, orders are placed with the same order quantity, but not necessarily with the same periodicity.arrow_forwardThe best quantity to order One of the formulas for inventorymanagement says that the average weekly cost of ordering, payingfor, and holding merchandise iswhere q is the quantity you order when things run low (shoes,TVs, brooms, or whatever the item might be); k is the cost ofplacing an order (the same, no matter how often you order); c isthe cost of one item (a constant); m is the number of items soldeach week (a constant); and h is the weekly holding cost per item(a constant that takes into account things such as space, utilities,insurance, and security). Find dA>dq and d2A>dq2.arrow_forward
- XYZ Company must order tires from its warehouse. It costs $10550 to place an order and to review the inventory level. Annual tire sales are normally distributed with mean 20000 and variance 4,000,000. It costs $10 per year to hold a tire in inventory, and each order arrives two weeks after being placed. The Company uses periodic review (R, S) policy. What is the review interval R (in years), estimated using EOQ.? Select one: a. 1.027 O b.0.1083 c. 0.2297 d. 0.1624 e. 0.3248arrow_forwardA product’s demand in each period follows a normal distribution with mean of 60 and standard deviation of 10. The order-up-to level is 270 and the lead time is 2 weeks. Orders are placed every 2 weeks. What is the expected on-hand inventory? 140 80 31 8arrow_forward3: A manufacturer maintains an inventory of needles. Inventory consumption is constant at 1200 needles per day and lead time for new needles is constant at five days. If the manufacturer wishes to maintain a safety stock of 600 needles, what should its reorder point be? OA. 5000 OB. 5400 F2 OC. 4800 OD.7200 OE. 6600 OF. 6000 #3 A Moving to another question will save this response. 80 E F3 $ 4 DOD OOD F4 R % 5 F5 T A 6 MacBook Air Y & 7 ◄◄ F7 U * 8 ► 11 F8 ( 9 F9 O ) 0 F10 >> (4) F11 + 11 F12 # 2 delearrow_forward
- . Suppose inventory is managed using the order-up-to model. Which of the following actions will certainly lead to a higher order-up-to level? In all cases, assume thecharacteristics of the demand process do not change. I. Increase in the target in-stock probability (for the same lead time)II. Increase in the lead time (for the same in-stock probability)a. I onlyb. II onlyc. I and IId. None of the abovearrow_forward(Round your answer to 2 decimal places.) A retailer uses the order-up-to model to manage inventory of an item in a store. The lead time for replenishments is 4 weeks and it can place orders weekly. Weekly demand is Poisson with mean 0.05 unit. Its order-up-to level is 5 and unfilled demand is backordered. What is the coefficient of variation of its orders?arrow_forwardA customer buys 1 ABC Jan 35 put for a premium of $3 and simultaneously buys 100 shares of ABC stock for $35 per share. The customer will break even when the stock is selling for what price per share at expiration?arrow_forward
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