PA 14-5 A Cold Inc is a frozen food distributor with... Use Table 14.1 Answer is
ID: 365766 • Letter: P
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PA 14-5 A Cold Inc is a frozen food distributor with... Use Table 14.1 Answer is complete but not entirely correct. ACold Inc is a frozen food distributor with 10 warehouses across the country. Ivan Tory, one of the warehouse managers, wants to make sure that the inventory policies used by the warehouse are minimizing inventory while still maintaining quick delivery to ACold's customers. Since the warehouse carries hundreds of different products, Ivan decided to study one. He picked Caruso's Frozen Pizza (CFP). Average daily demand for CFPs is normally distributed with a mean of 387 and a standard deviation of 156. Since ACold orders at least one truck from their supplier each day, ACold can essentially order any quantity of CFP it wants each day. In fact, ACold's computer system is designed to implement an order-up-to policy for each product. Ivan notes that any order for CFPs arrives 5 days after the order Suppose an order-up-to level of 2412 is used. What is the expected on-hand inventory? Use Table 14.1 and round to nearest integer 500 Suppose an order-up-to level of 2576 is used. What is the expected on-order inventory? Round your 1,935 r answer to the nearest integer Suppose an order-up-to level of 1933 is used. What is the in-stock probability? Use Table 0.5 14.1. Round your answer to one decimal. Suppose ACold wants a 0.95 in-stock probability. What should the order-up-to level be? Use Table 14.1. Round your answer to the nearest integer 2,411Explanation / Answer
This is basestock inventory model
Average daily demand = 387
Std dev = 156
Lead time, l = 5 days
a) Average demand over l+1 period = 387*(5+1) =2322
SD of demand over l+1 period = 156*(5+1) = 382
Given order upto level = 2493
z = (2412-2322)/382 = 0.2355
Corresponding to z, value of I(z) taken from the table = 0.5278 (value determined using interpolation)
Expected on-hand inventory = I(z) = 382*0.5278 = 202
b) Expected on order inventory = Average daily demand * lead time (l) = 387*5 = 1935
c) Order upto level, S = 1933
z = (1933-2322)/382 = -1.018
Expected inventory on hand, V = I(z) = 382*0.0805 = 31
Expected backorder = µ - (S - V) = 2322 - (1933 - 31) = 420
Stock-in probability = 1 - backorder/expected demand over l+1 periods = 1 - 420/2322 = 0.8191
d) For 0.95 stock-in probability, z = 1.65 (taken from the table)
Order upto level, S = 2322 + 1.65*382 = 2952
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