Huckaby Motor Services, Inc rebuilds small electrical items such as motors, alternators, and transformers, all using a certain type of copper wire
The firm's demand for this wire is approximately normal, averaging 20 spools per week, with a standard deviation of 6 spools per week. Cost per spool is $24; ordering costs are $25 per order; inventory handling cost is $4.00 per spool per year. Acquisition lead time is four weeks. The company works 50, 5-day weeks per year.
a. What is the optimal size of an order, if minimization of inventory system cost is the objective?
b. What are the safety stock and reorder point if the desired service level is 90%?
Demand is 20 × 50 = 1000 spools per year
a. Q* = = 111.8 Huckaby should order 112 spools at one time.
b. SS = 1.28 × 6 × = 15.36 or about 15 spools. The ROP is thus 204. + 15 = 95 spools.
You might also like to view...
Some companies choose to provide no objective assurance regarding their sustainability reports
a. True b. False Indicate whether the statement is true or false
According to Transparency International, firms from which of the following countries are LEAST likely to pay bribes?
A) Germany B) the United Kingdom C) China D) Mexico E) Canada
Which of the following is an example of Do-it-Yourself advertising?
A) Toyota's presence in online communities B) Nike's Nike Plus running Web site C) MasterCard's use of "Priceless" commercials shot by customers D) Neiman Marcus's InCircle Rewards program for its best customers E) The Lexus Covenant aimed at creating customer delight
If a DBMS enforces a DELETE SET-TO-DEFAULT option on the referential integrity constraint betweenCLIENT and AGENT in the HAPPY INSURANCE database, what will be the outcome after auser tries to delete the last record (A4, James, 3, 90, 2010, A3 ) from
AGENT?A) CLIENT will have 7 records AGENT will have 4 records B) CLIENT will have 6 records AGENT will have 3 records C) CLIENT will have 7 records AGENT will have 3 records D) CLIENT will have 6 records AGENT will have 4 records