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A product with an annual demand of 1,000 units has C = $27.50 and Ch = $7. The demand exhibits some variability such that the lead- time demand follows a normal probability distribution with μ = 25 and o = 5. (a) What is the recommended order quantity? (Round your answer to the earest integer.) (b) What are the reorder point and safety stock if the firm desires at most a 4% probability of stock-out on any given order cycle? (You may need to use the appropriate appendix table or technology to answer this question. Round your answers to the nearest integer.) reorder point safety stock (c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to four decimal places.) How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest integer.)

A product with an annual demand of 1,000 units has C = $27.50 and Ch = $7. The demand exhibits some variability such that the lead- time demand follows a normal probability distribution with μ = 25 and o = 5. (a) What is the recommended order quantity? (Round your answer to the earest integer.) (b) What are the reorder point and safety stock if the firm desires at most a 4% probability of stock-out on any given order cycle? (You may need to use the appropriate appendix table or technology to answer this question. Round your answers to the nearest integer.) reorder point safety stock (c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to four decimal places.) How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest integer.)

Calculus For The Life Sciences
Calculus For The Life Sciences
2nd Edition
ISBN:9780321964038
Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Chapter13: Probability And Calculus
Section13.CR: Chapter 13 Review
Problem 60CR
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A product with an annual demand of 1,000 units has C = $27.50 and Ch = $7. The demand exhibits some variability such that the lead- time demand follows a normal probability distribution with μ = 25 and o = 5. (a) What is the recommended order quantity? (Round your answer to the earest integer.) (b) What are the reorder point and safety stock if the firm desires at most a 4% probability of stock-out on any given order cycle? (You may need to use the appropriate appendix table or technology to answer this question. Round your answers to the nearest integer.) reorder point safety stock (c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to four decimal places.) How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest integer.)
Transcribed Image Text:A product with an annual demand of 1,000 units has C = $27.50 and Ch = $7. The demand exhibits some variability such that the lead- time demand follows a normal probability distribution with μ = 25 and o = 5. (a) What is the recommended order quantity? (Round your answer to the earest integer.) (b) What are the reorder point and safety stock if the firm desires at most a 4% probability of stock-out on any given order cycle? (You may need to use the appropriate appendix table or technology to answer this question. Round your answers to the nearest integer.) reorder point safety stock (c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to four decimal places.) How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest integer.)
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