Question

respectively. Case Study - Kyle Bits and Bytes Kyle Bits and Bytes, a retailer of computing products sells a variety of computer-related products. One of Kyle's most popular products is an HP laser printer. The average weekly demand is 200 units. Lead time (lead time is defined as the amount of time between when the order is placed and when it is delivered) for a new order from the manufacturer to arrive is one week. If the demand for printers were constant, the retailer would re-order when there were exactly 200 printers in inventory. However, Kyle learned demand is a random variable in his Operations Management class. An analysis of previous weeks reveals the weekly demand standard deviation is 30. Kyle knows if a customer wants to buy an HP laser printer but he has none available, he will lose that sale, plus possibly additional sales. He wants the probability of running short (stock-out) in any week to be no more than 6%.

what should the reorder point be? how many hp laser printers should be in stock when he reorders? please show work and explanations . thank you

Answer 1

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we know that reorder point CROP) is given by ROP - (d.LT+ z. JET Average daily demand de 200 onits/day) 7 LT (lead time) - I week = 7 days 2* - 1.56 (from standand Normal table) to (Nearest z-value that corresponds t = 30 to an area under the normal curve to the rest of a fer 94%) Risk of stock out = 67. i.e service level = 94%. ROP- (200 x 7) + (1.56 x 30 x 57) ROP = 217.69 units. Ans when inventory level reaches 218 unit, ordes will be placed. Safety stock => z. o JLT = 1.56% 30 + J7 = 17.69 units I 18 units is units should be in stock Ang &