Question

Annual demand for a Tonka Trucks is 22,100 units: with a weekly standard deviation of 85 units. The cost of making an order from Indonesia and paying shipping is $1,200, and the time from ordering to receipt is 3 weeks. The annual inventory carrying cost is $1.50 per unit. 1. Specifically, what is the optimal order quantity? 2. To provide a 98% service level, what must the reorder point be? Samantha's Poker Gallery orders snacks from Cisco every week. The order always arrives exactly one week after the order. The Poker Gallery uses an average of 400 bags of potato chips and 300 bags of M&M's each week, with a standard deviation of 70 bags for the potato chips and 20 bags for the M&M's. Charlie's wants a 99% probability of not stocking out M&M's and potato chips. Assume that it is time for Samantha to check her inventory and there are currently 305 bags of M&M's and 375 bags of potato chips. How many bags of Potato chips should Samantha order?

Answer 1

Recorder point : Lead time = 3 weeks Here weekly demond is =425 ie., 22, 22,100 - -415 52 Expected demand during this time is = No. of weeks x weekly demand. = - 3x425 1975 units Here Standard deviation = 85 units. Slandard deviation for the 3 weeks period. = Sunils x 30.5 = 147.22 units. Al the 98% probability level, the 2-score 2.053 (from the zotable] Safety stock = z-value x Standard deviation for the - 2.053 x 147.22 302.24 266 Recorder point = safely shock + eapected demand during time period so = 30224266 + 1295 . 1577.24266