13. The University of Madrid Computer Services Center orders cases of blank CD,
ID: 328732 • Letter: 1
Question
13. The University of Madrid Computer Services Center orders cases of blank CD, which university departments then order from the center. The center wants to de termine the order point to use so that a 75 percent service level is provided to de partments during the replenishment periods. The following historical demand dur- ing lead time data for the center has been collected: Actual DDLT # of Occurrences Actual DDI.T # of Occurrences 4 10 12 leab This data covers the center's past 45 orders to its supplier. The replenis time is four days to receive an order of CDs. a. Compute the order point. b. Compute the expected demand during lead time. c. What is the effective level of safety stock resulting from this ord hment 14. If EDDLT 65.5 units,o10Explanation / Answer
Construct cumulative probability distribution table
In the above table, Probability is calculated as = # of occurrences / Total
For example, for Actual DDLT of 10, probability = 2/45 = 0.04
Cumulative probability is running sum of probability
a) For 75 percent service level, Order point is the actual DDLT corresponding to cumulative probability greater than 0.75, that DDLt is 8
Therefore, order point = 8
b) Expected demand during lead time = SUMPRODUCT of Actual DDLT and Probability
= 3*0.04+4*0.07+5*0.13+6*0.18+7*0.24+8*0.16+9*0.09+10*0.04+11*0.02+12*0.02 = 6.8
c) Effective level of safety stock = Order point - Expected demand during lead time = 8 - 6.8 = 1.2
Actual DDLT # of occurrences Probability Cumulative Frequency Interval 3 2 0.04 0.04 0 - 0.04 4 3 0.07 0.11 0.04 - 0.11 5 6 0.13 0.24 0.11 - 0.24 6 8 0.18 0.42 0.24 - 0.42 7 11 0.24 0.67 0.42 - 0.67 8 7 0.16 0.82 0.67 - 0.82 9 4 0.09 0.91 0.82 - 0.91 10 2 0.04 0.96 0.91 - 0.96 11 1 0.02 0.98 0.96 - 0.98 12 1 0.02 1.00 0.98 - 1 Total 45Related Questions
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