ZuoTi.Pro
Question

Multi-period Inventory Control Question

The average daily demand for sewing needles at RD Designs is 300 units with a standard  deviation of 50 units. An order takes 2 days to arrive and the representative stops by every  6 days. The CEO of the RD Designs desires to maintain a 99% service level. Assuming the  representative just arrived, and there are 150 needles in stock, how many needles should  they order? 

Inventory   calculus   Collegemathematics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

To calculate the order quantity, we need to consider the lead time demand and safety stock to achieve the desired service level.

Given information: Average daily demand (D) = 300 units Standard deviation of daily demand (σ) = 50 units Lead time (LT) = 2 days Visit frequency (VF) = 6 days Service level = 99% (which corresponds to a z-value of 2.33 for a normal distribution)

Step 1: Calculate the Lead Time Demand (LTD) LTD = D * LT LTD = 300 units/day * 2 days = 600 units

Step 2: Calculate the Safety Stock (SS) using the z-value SS = z * σ * sqrt(VF) SS = 2.33 * 50 units * sqrt(6 days) ≈ 2.33 * 50 units * 2.449 = 286.285 ≈ 287 units

Step 3: Calculate the Reorder Point (ROP) ROP = LTD + SS ROP = 600 units + 287 units = 887 units

Step 4: Calculate the Order Quantity (Q) Q = ROP - Current Stock Q = 887 units - 150 units = 737 units

The company should order 737 needles to maintain a 99% service level with a representative just having arrived and 150 needles in stock.


answered by: Mayre Yıldırım
0 0
Add a comment
Know the answer?
Add Answer to:
Multi-period Inventory Control Question
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

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

  • Please kindly explain all the formulas and also how to find z value from service level...

    Please kindly explain all the formulas and also how to find z value from service level in steps Question 5: (5 Points) A local company uses an average of 650 items a day. The daily usage has a standard deviation of 23. The manager is willing to accept no more than a 1% chance of a stock out. The lead-time is 14 days. (Assuming the distribution of usage is normal). What is the re-order point? Question 6: (5 Points) A...

  • Hello I need help to figure out the MIN Inventory for my stimulation game. I got...

    Hello I need help to figure out the MIN Inventory for my stimulation game. I got the daily ending inventory but how do I get the min inventory and total capactiy needed in excel. For example, I got my available capacity of 20, and the daily ending inventory by taking the beginning inventory-the demand+available capacity. But I'm not sure how to calculate min inventory and total capacity needed in excel. Also can you please help with Order point below. thank...

  • a large department store is using inventory models to control the replenishment of a particular model...

    a large department store is using inventory models to control the replenishment of a particular model of Microwave ovens.  The daily demand follows a normal distribution with a mean of 150 units and standard deviation of 16 units.  The store pays $100 for each oven.  Fixed costs of replenishment are $28.  The accounting department recommends a 20% annual holding cost rate.  Assume that the average lead time is 5 days with a standard deviation of 1 day. Assume 365 days a year. What is the...

  • University Drug Pharmaceuticals orders its antibiotics every two weeks (14 days) when a salesperson visits from...

    University Drug Pharmaceuticals orders its antibiotics every two weeks (14 days) when a salesperson visits from one of the pharmaceutical companies. Tetracycline is one of its most prescribed antibiotics, with average daily demand of 2,700 capsules. The standard deviation of daily demand was derived from examining prescriptions filled over the past three months and was found to be 750 capsules. It takes four days for the order to arrive. University Drug would like to satisfy 90 percent of the prescriptions....

  • Thomas Toys Ltd. uses a periodic review inventory management system. One important item for the company is building blocks, which sell, on average, five sets per day. However, the standard deviation o...

    Thomas Toys Ltd. uses a periodic review inventory management system. One important item for the company is building blocks, which sell, on average, five sets per day. However, the standard deviation of demand is two sets per day. The company checks the status of inventory for building blocks every 8 days. When blocks are reordered from the supplier, it takes 12 days to be replenished. Thomas has just checked its inventory and found that it currently has 165 sets in...

  • 5 points Consider an item with item cost 100. The cost per order is 75 and...

    5 points Consider an item with item cost 100. The cost per order is 75 and holding cost is 30% of the item cost. Daly demand is 10 units. The supplier takes 12 days to deliver the products. Assume that demand is constant. Also assume that working days in a year are 300 1. What shall be economic order quantity? 2. What shall be reorder point to run this inventory system? 3- What shall be total annual cost to run...

  • Presentation subject FIT Lesson 9 - Fixed Time Period Order Model • A company has 200...

    Presentation subject FIT Lesson 9 - Fixed Time Period Order Model • A company has 200 units of a product on-hand that it orders every two weeks when the salesperson visits the premises. Demand for the product averages 20 units per day with a standard deviation of 3 units. Lead time for the product to arrive is seven days. Management has a goal of a 90% percent probability of not stocking out for this product. (Round your answer up to...

  • The annual demand for a product is 64,000 items and the holding cost is $0.50 item/year....

    The annual demand for a product is 64,000 items and the holding cost is $0.50 item/year. 1) What will be the Economic Order Quantity and the total annual cost if the cost of placing each orde is $250? b) If the company operates 300 days per year and the lead time is 9 days, find the recorder point assuming that the daily demand is constant c) Now suppose that the daily demand is Normal with mean as implied from the...

  • 4) S uppose that lead-time demand is normally distributed with a mean of 100 units and...

    4) S uppose that lead-time demand is normally distributed with a mean of 100 units and a standard deviation of 20 units, If the firm wants to maintain 92% service Jevel, what should the reorder point be? 2-1.88 Pop-137.6units 5) We use 1,500 per year of a certain subassembly that has an annual holding cost of $45 placed costs us $150. We operate 300 days per year and have found that an order must be placed with our supplier 6...

  • Macon Bacon (MB) is a distributor of bacon products. The weekly demand for a 15-lb slab...

    Macon Bacon (MB) is a distributor of bacon products. The weekly demand for a 15-lb slab of bacon is normally distributed with mean 600 units per week and standard deviation 63 units per week. It takes 9 days to receive an order delivery (assume 7 days per week) and MB reviews its inventory every 4 days. MB would like to maintain a cycle service level of 95%. MB purchases the slabs from a supplier for $65 per unit. Annual holding...

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