.ll Verizon LTE 5:15 PM * 56%. mathxl.com MBA 507A Spring 2018 Charles Cercone 1
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.ll Verizon LTE 5:15 PM * 56%. mathxl.com MBA 507A Spring 2018 Charles Cercone 1 3/15/18 5:15 P Homework: Graded Problems Chapter 9 Score: 0 of 10 pts Problem 28 2 of 2 (1 complete) HW Score: 60%, 18 of 30 Question Help Sam's Cat Hotel operates 50 weeks per year, 6 days per week. It purchases kitty litter for $7.00 per bag. The following information is available about these bags > Demand 75 bags/week > Order cost $65/order >Annual holding cost 22 percent of cost > Desired cycle-service level = 96 percent Lead time: 4 week(s) (24 working days) > Standard deviation of weekly demand 8 bags >Current on-hand inventory is 205 bags, with no open orders or backorders. Suppose that Sam's Cat Hotel uses a P system. The average daily demand, d, is 13 bags (75/6), and the standard deviation of daily demand, Standard Deviation of Weekly Demand is 3.266 bags. Refer to the standard normal table for z-values Days per Week a. What P (in working days) and T should be used to approximate the cost trade-offs of the EOQ? The time between orders, P, should be 43 days. (Enter your response rounded to the nearest whole number) The target inventory. T, should be bags. (Enter your response rounded to the nearest whole number)Explanation / Answer
Target Inventory is the Reorder point = d-bar*Lead time + z*standard deviation*sqrt(Lead time)
For service level 96% or 0.96, the z value is 1.75 (Refer z table)
d-bar = 13
Lead time = 24 days
standard deviation = 3.266
Target inventory = 13*24 + 1.75*3.266*sqrt(24) = 340
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