Question

Hatemoglu, a clothing company, desires to increase the efficiency of their inventory for their most successful...

Hatemoglu, a clothing company, desires to increase the efficiency of their inventory for their most successful product. For this product, manager of warehouse wants to use the (Q,R) model. The purchase cost is $200 for each product and annual interest rate is 20 percent. Annual demand for this product is normal distribution with mean 5200 and standard deviation is 72.111. A warehouse pays $100 for each order and if there is stockout, the company pays $400 for each stockout occasion.
Assume there are 52 weeks in a year and lead time is 1 week for each order.
a)Find the optimal order quantity and reorder point if the warehouse obtains 95% type 1 service level.

b)By using the information from the previous problem, determine the optimal (Q, R) values so as to obtain a 95% type 2 service level
0 0
Add a comment Improve this question Transcribed image text
Know the answer?
Add Answer to:
Hatemoglu, a clothing company, desires to increase the efficiency of their inventory for their most successful...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Crew Soccer Shoes Company is considering a change in its current inventory control system for soccer...

    Crew Soccer Shoes Company is considering a change in its current inventory control system for soccer shoes. The information regarding the shoes is as follows: Average demand = 200 pairs/week Lead time = 4 weeks Order cost = $60/order Unit cost = $16.50 Carrying charge rate = 0.30 Desired service level = 95 percent Standard deviation of weekly demand = 35 Number of weeks per year= 52 The company decides to use a fixed-order-quantity system. What is the economic order...

  • DA store uses a (Q,R) inventory system to control its stock levels. For a popular product,...

    DA store uses a (Q,R) inventory system to control its stock levels. For a popular product, historical data show that the distribution of monthly demand is approximately Normal, with mean 56 and standard deviation 16. Lead time for this paint is about 20 weeks. Each product costs the store $8. Fixed cost of replenishment is $20 per order and holding costs are based on a 35% annual interest rate. a) (10 pts) What is the optimal lot size (order quantity)...

  • Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of...

    Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all the paint located at each of their 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of 64 gallons of Green Paint every week (for 52 weeks per year). They purchase Green Paint from their supplier at a price of $3.50 per gallon. [The company does not hold Safety Stock] It takes 2.25 weeks to receive an order...

  • A newspaper publisher uses roughly 890 feet of baling wire each day to secure bundles of...

    A newspaper publisher uses roughly 890 feet of baling wire each day to secure bundles of newspapers while they are being distributed to carriers. The paper is published Monday through Saturday. Lead time is 5 workdays. What is the appropriate reorder point quantity, given that the company desires a service level of 95 percent, if that stockout risk for various levels of safety stock is as follows: 1,500 feet, 10; 1,700 feet, .05 1,800 feet, .02; and 2,800 feet, .01?...

  • A firm desires to control inventory levels so as to minimize the sum of holding and...

    A firm desires to control inventory levels so as to minimize the sum of holding and order costs. It costs the firm $20 to place an order. The firm estimates its inventory carrying costs at $2/unit/year. Weekly demand is 100 units and there are 50 weeks in the work year. The item costs $10 per unit. Leadtime for the product is 5 weeks. 32. What quantity of items should the firm order each time so as to minimize total inventory...

  • An automotive warehouse stocks

     An automotive warehouse stocks a variety of parts that are sold at neighborhood stores. One particular part, a popular brand of oil filter, is purchased by the warehouse for $1.50 each. It is estimated that the cost of order processing and receipt is $100 per order. The company uses an inventory carrying charge based on a 25 percent annual interest rate. The monthly demand for the filter follows a normal distribution with mean 280 and standard deviation 70. Order...

  • Use the Continuous Inventory Model and the data below to answer these six questions. Forecast of...

    Use the Continuous Inventory Model and the data below to answer these six questions. Forecast of demanda = 36,000 units per week Forecast error, std. dev. = 800 units per week Lead time = 2.5 weeks Lead time error, std. dev = 1.2 weeks Carrying cost = 20% per year Purchase price, delivered = $65 per unit Replenishment order cost = $2,000 per order Stockout cost - $2 per unit EOQ = 24,000 units In-stock Probability during the lead time...

  • need C, D, and F completed Use the Continuous Inventory Model and the data below to...

    need C, D, and F completed Use the Continuous Inventory Model and the data below to answer these six questions. Forecast of demanda = 36,000 units per week Forecast error, std. dev. = 800 units per week Lead time = 2.5 weeks Lead time error", std. dev = 1.2 weeks Carrying cost = 20 % per year Purchase price, delivered = $65 per unit Replenishment order cost = $2,000 per order Stockout cost = $2 per unit EOQ = 24,000...

  • Petty House operates 52 weeks per year, 6 days per week, and uses a continuous review inventory

    Petty House operates 52 weeks per year, 6 days per week, and uses a continuous review inventory system (i.e. Q system). It purchases kitty litter for $ 10 per bag. The following information is available about these bags. Demand = 102 bags/ week Order cost = $ 49/ order Annual holding cost = 25 percent of cogs Desired cycle service level = 80 percent Lead time = 3 weeks Standard deviation of weekly demand = 15 bags Current on-hand inventory...

  • M7_IND5. Peter Sagan is in charge of maintaining hospital supplies at Champs Hospital. During the past year the mean weekly demand for a special type of tubing was 186 packages of this tubing with a s...

    M7_IND5. Peter Sagan is in charge of maintaining hospital supplies at Champs Hospital. During the past year the mean weekly demand for a special type of tubing was 186 packages of this tubing with a standard deviation of 13 packages of tubing. The lead time for receiving this tubing from the supplier is 1.5 weeks. Peter would like to maintain a 95% service level and places an order for 750 packages every time an order is placed. a) How much...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT