Rolf Steps is the production manager for a local manufacturing firm. This compan

Question

Rolf Steps is the production manager for a local manufacturing firm. This company produces staplers and the other items. The holding cost is $2 per unit per year. The cost of setting up the production line for this is $25. There are 200 working days per year. The production rate for this product is 80 per day. If the production order quantity is 200 units, what was the daily demand (rounded to the nearest whole unit)? The demand during the lead-time is normally distributed with a mean of 40 and a standard deviatic of 4. If the company wishes to maintain a 90 percent service level, how much safety stock should be he

Explanation / Answer

Answer:

Z value for 90% upper limit = 1.282

X= mean+z*sd

= 40+1.282*4

=45.128

=46 uints

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