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Chapter 4: 16OQ (page 546)

Lieutenant Commander Data is planning to make his monthly (every 30 days) trek to Gamma Hydra City to pick up a supply of isolines chips. The trip will take Data about two days. Before he leaves, he calls in the order to the GHC Supply Store. He uses chips at an average rate of five per day (seven days per week) with a standard deviation of demand of one per day. He needs a 98 percent service probability. If he currently has 35 chips in inventory, how many should he order? What are the most he will ever have to order?

Short Answer

Expert verified

Answer

According to the Next Generation Technical Manual, isolinear chips included inbuilt nanotech processors to help with memory access and a maximum capacity of 2.15 kilo-quads.

Step by step solution

01

The value of z is 2.054 when the service level is 98%

Given,

Time is taken for manufacturing = 30 days

Time taken for trip = 2 days

The standard deviation of demand = 1 day

Currently inventory (I) = 35 chips

value of z = 2.054

service level is 98%

未罢+L=M+LS

where,

T = Time taken for manufacturing

L= Time taken for trip

S= Standard deviation of demand

未T+L=M+LS=30+212=32=5.66

02

Calculation of quantity

q=dT+1+z未罢+L-I=530+2+2.0545.66-35=160+11.62-35=136.62

So, the optimal number of units required to be ordered is 136.62

03

Calculation of maximum number of units ordered

q=dT+1+z未罢+L-I=530+2+2.0545.66-0=160+11.62-0=171.63

So, the maximum number of units ordered would be 1.

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Most popular questions from this chapter

The annual demand for a product is 15,600 units. The weekly demand is 300 units with a standard deviation of 90 units. The cost to place an order is \(31.20, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is \)0.10 per unit. Find the reorder point necessary to provide a 98 percent service probability.

Jill鈥檚 Job Shop buys two parts (Tegdiws and Widgets) for use in its production system from two different suppliers. The parts are needed throughout the entire 52-week year. Tegdiws are used at a relatively constant rate and are ordered whenever the remaining quantity drops to the reorder level. Widgets are ordered from a supplier who stops by every three weeks. Data for both products are as follows:

Item

Tegdiws

Widgets

Annual demand

10,000

5,000

Holding cost (% of item cost)

20%

20%

Setup or order cost

\( 150.00

\) 25.00

Lead time

4 weeks

1 week

Safety stock

55 units

5 units

Item cost

\( 10.00

\) 2.00

Annual demand Holding cost (% of item cost) Setup or order cost

a. What is the inventory control system for Tegdiws? That is, what is the reorder quantity and what is the reorder point?

b. What is the inventory control system for Widgets?

Retailers Warehouse (RW) is an independent supplier of household items to department stores. RW attempts to stock enough items for a 98 percent service probability. A stainless steel knife set is one item it stocks. Demand (2,400 sets per year) is relatively stable over the entire year. Whenever a new stock is ordered, a buyer must assure that numbers are correct for stock on hand and then phone in a new order. The total cost involved to place an order is about \(5. RW figures that holding inventory in stock and paying for interest on borrowed capital, insurance, and so on, add up to about \)4 holding cost per unit per year. Analysis of the past data shows that the standard deviation of demand from retailers is about four units per day for a 365-day year. Lead time to get the order in seven days.

a. What is the economic order quantity?

b. What is the reorder point?

From the choice of a simple moving average, weighted moving average, exponential smoothing, and linear regression analysis, which forecasting technique would you consider the most accurate? Why?

After graduation, you decide to go into a partnership in an office supply store that has existed for some years. Walking through the store and stockrooms, you find a great discrepancy in service levels. Some spaces and bins for items are empty; others have supplies that are covered with dust and have been there a long time. You decide to take on the project of establishing consistent levels of inventory to meet customer demands. Most of your supplies are purchased from just a few distributors that call on your store once every two weeks. You choose, as your first item for study, computer printer paper. You examine the sales records and purchase orders and find that demand for the past 12 months was 5,000boxes. Using your calculator you sample some days鈥� demands and estimate that the standard deviation of daily demand is 10 boxes. You also search out these figures:

Cost per box of paper: $11.

Desired service probability: 98 percent.

The store is open every day.

Salesperson visits every two weeks.

Delivery time following visit is three days.

Using your procedure, how many boxes of paper would be ordered if, on the day the salesperson calls, 60 boxes are on hand?
See all solutions

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