Question

Bass-killer, a special plastic bait, is available at the Winona Fishing Cabin(WFC) at $10 per bag. The demand can be approximated by a normal distribution with a mean of 21 bags per week and a standard deviation of 3.4 bags per week. Lead time is 3 weeks, and there will be shipping cost $50 for each order. The new manager desires a chance of stockout of 5% or lower, and estimates the annual inventory holding cost is 20% of sales price. Assume 1 year = 50 weeks. Suppose the manager is using the ROP described in part b). One day, the manager receives a call from the supplier that the order will be delayed because of problem at the supplier's truck. The supplier promises to have the order there in 2 weeks from now. After hanging up, the manager checks the supply of Bass-killer and finds that 25 bags have been sold since the previous order was placed. Assuming the suppliers promise is valid, what is the probability that WFC will run out of Bass-killer before the shipment arrives?(round to the nearest hundredth, for z value) Standard Normal Cumulative Probability Table Cumulative probabilities for POSITIVE z-values are shown in the following table: Z 0. 0 0.1 0 0.00 5000 0.5398 0.5793 0.6179 0.6554 0.01 05040 0.5438 0.5832 0.6217 0.6591 0.02 0.50800 0.5478 0.5871 0.6255 0.6628 0.03 0.04 .51200 160 0.5517 0.5557 0.59100 5048 0.6293 0.6331 0.6664 0.6700 0.05 05199 0.5598 0.5987 0.6368 0.6736 0.06 0.5239 0.5636 0.6028 0.6406 0.6772 0.07 0.5279 0.5675 0.8084 0.6443 0.6808 0.08 0.5319 0.5714 0.6103 0.8480 0.6844 0.09 0.5359 0.5753 0.6141 0.6517 0.6879 0.3 0.5 0.7123 0.7454 0.7 0.8 0.6915 0.7257 0.7580 0.78.81 0.8159 0.6950 0.7291 0.7611 0.7910 0.8186 0.6985 0.7324 0.7642 0.7939 0.8212 0.7019 0.7357 0.7673 0.7987 0.8238 0.7054 0.7389 0.7704 0.7995 0.8264 0.7088 0.7422 0.7734 0.8023 0.8289 0.7157 0.7488 0.7794 0.8078 0.8340 0.7190 0.7517 0.7823 0.8108 0.8365 0.7224 0.7549 0.7852 0.8133 0.8389 0.8051 0.8315 0.9 1.1 0.8413 08.843 0.88490 0.9032 0.9192 0.8438 0 8665 8869 0.9049 0.9207 0.8461 0.886 0 8888 09066 0.9222 05485 0.8708 0907 0.9082 0.9236 0.8509 0.87729 08925 0 9099 0.9251 08531 0.8564 0.87490 8770 08944 0.8982 0.9115 0.9131 0.9265 0.9279 08577 0.8599 0.87900.8810 0.8980 0.9997 0.9147 0.9182 0.9292 0.9306 0.8621 08830 0.9015 0.9177 0.9319 0.9332 09345 0.935700370 0.9382 09394 09406 09418 0.9429 0.9441

Answer 1

Given data → BOSS - Killer, a special plastic bait, is availobk at the winona fishing cabin (WFC) at per bag $10 > A nolmal distribution (d) = al bags per week - standard deviation cod) = 34 bags per week - lead time (2) = 3 weeks - Shipping cost (5)- $50 for each oder » The annual inventory holding Cost (H) = 10x20 100 - 200 100 Assume lyor (W) = 50 Weeks

» 2= 1.65 (for 9.95%). Recader point = demand dusting lead time t Safety stock = d x2 + Safety Stock = (21X3 ) +Zx 6d XL = 63 +165 X3.9x18 = 63 +561X173 = 63+9.72 = 79.79 - 73 units Items to be held as safety stock = 2 XSDX (lead time) a = 1.65 x 3.4x (3) Ya = 1065 x 3.4x1.73 = 9.716 = 10 units .