Question

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 nearest whole number and show your work for full credit.) How many units should be ordered? Formulas: q=d(T + L) + zor+L - I OT+L = V(T+L)?

Answer 1

Solution :-

No. of days between deviews : 14 days. Lead Time in days = 7 days (L2 Standard deviation 100)= 3 units Ofte & IT + L) ? = 114+10) - 1189 - 13.75 Current Inventory level (I) - Units in the hand – Demand for Product per day = 200 units - 20 units = 180 units Forcast average daily demand (a) i 20 units

probability is 1.28 2- Score so for 90% z= 1.28 Now, quantity to be ordered (9) = a (T+6) + z(87+2) - I = 20 (14+ 7) + (1.28) (13.75) - 180 - 20121) + 1706 - 180 = 420 t 17.6 - 180 - 257.6 or 258 units Thus, 258 units should be ordered. Note Demand for Product in a day is 20 units. So, it is assumed to be sold on that day. So, inventory level would be 180 counts (200 - 20).