QUESTION 5 1 points Save Answer Cases of Watermelonrita at the local gas station
ID: 334444 • Letter: Q
Question
QUESTION 5 1 points Save Answer Cases of Watermelonrita at the local gas station has a demand during lead time of 100 units, with a standard deviation during lead time of 25 units. What safety stock (approximately) provides a 95% service level? QUESTION 6 1 points Save Answer Consider a local club selling Christmas trees. If trees cost $15 and sell for $60 with no salvage value, what is the ideal service level? (leave answer as a decimal) QUESTION 7 1 points Save Answer 10. He sells papers for S0.50 and pays $0.30 for them. Unsold papers are trashed with no salvage value. How many papers should he order each day? Note the potential drawbacks to the order size proposed, which gives a relatively low service level (which could result in unhappy customers). Finding a way to get some salvage value could go a long way towards improving his business.Explanation / Answer
Answer to question 5 :
Z value of 95% service level = 1.6448
Therefore , Safety stock
= Z value x Standard deviation of demand during lead time
= 1.6448 x 25
= 41.12 ( 41 rounded to nearest whole number )
SAFETY STOCK = 41
Answer to question 6 :
Given are following details :
Selling price = P = $60
Cost = C = $15
Salvage value = S = 0
Therefore,
Underage cost = Cu = P – C = $60 - $15 = $45
Overage cost = Co = $15 – 0 = $15
Therefore , Critical ratio = Cu / ( Cu + Co) = 45 / ( 45 + 15 ) = 45/60 = 0.75
Critical ratio is the in stock probability of the optimum order quantity .
Service level = 100 x In-stock probability = 100 x 0.75 = 75 %
SERVICE LEVEL = 75 %
Answer to question 7 :
Given are following details about papers :
Selling Price = P = $0.50
Cost = C = $0.30
Salvage price = S = 0
Therefore,
Underage cost = Cu = P – C = $50 - $0.30 = $0.20
Overage cost = Co = C – S = $0.30 – 0 = $0.30
Therefore , Critical ratio = Cu/ ( Cu + Co ) = 0.20/ ( 0.20 + 0.30 ) = 0.20 /0.50 = 0.40
Critical ratio is the in stock probability of optimum order quantity
Z value of in stock probability = NORMSINV ( 0.40 ) = - 0.2533
Number of papers should be ordered every day
= Mean demand + z value x Standard deviation of demand
= 100 – 0.2533 x 10
= 100 – 2.533
= 97.467 ( 97 rounded to nearest whole number )
HE SHOULD ORDER 97 NEWSPAPERS EVERYDAY
SAFETY STOCK = 41
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