11.9 A company stocks an SKU with a weekly demand of 500 units and a lead time of 4 weeks. Management will tolerate one stockout per year. If sigma for the lead time is 100 and the order quantity is 2500 units, what is the average inventory and the order point?
Added by Melissa R.
Close
Step 1
Calculate the sigma value for the lead time: = 100*(4 weeks/week) = 400 Show more…
Show all steps
Your feedback will help us improve your experience
Madhur L and 93 other Intro Stats / AP Statistics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
Based on an EOQ analysis (assuming a constant demand), the optimal order quantity is 2,500. The company desires a safety stock of 500 units. A 5-day lead time is needed for delivery. Annual inventory carrying costs equal 25% of the average inventory level. The company pays P4 per unit to buy the product, which it sells for P8. The company pays P150 to place a detailed order, and the monthly demand for the product is 4,000 units. Compute for the annual inventory carrying costs. *
Madhur L.
The annual demand for a product is 1,000 units. The company orders 200 units each time an order is placed. The lead time is 6 days. There are 250 working days per year. If the reorder point is 50, what safety stock are they using?
Manasvee S.
In a safety stock problem where both demand and lead time are variable, demand averages 100 units per day with a daily standard deviation of 15, and lead time averages 5 days with a standard deviation of 1 day. What is the ROP? Service level is 97.5%. 15 units 154 units 500 units 673 units 707 units
Sri K.
Recommended Textbooks
Elementary Statistics a Step by Step Approach
The Practice of Statistics for AP
Introductory Statistics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD