Add2) Assume the expected annual customer demand for one of its products is m D
ID: 326997 • Letter: A
Question
Add2) Assume the expected annual customer demand for one of its products is mD = 500 units. Demand during order delivery lead-time is given
Lead-time Demand
0
2
4
6
8
10
12
14
16
18
Probability
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
We further assume that we order Q = 50 units product each time and with a Reorder point is selected: ROP = 11
Question: For the given order quantity and reorder point
What is the cycle stock?
What is the safe stock?
Assume unsatisfied demand from on-hand-inventory will be backordered, what is the total number of customer demand in units will be backordered in each ordering cycle, and every year?
What is the total number of customer demand in units can be satisfied by on hand inventory in each ordering cycle, each year?
Calculate the proportion of customer demand to be backordered, SLLoss, and Demand Fill Rate, SLFill.
Lead-time Demand
0
2
4
6
8
10
12
14
16
18
Probability
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
Explanation / Answer
(a)
Maximum cycle stock = Q = 50
Average cycle stock = (Q+0)/2 = 25
(b)
Safety stock = ROP - average lead time demand = 11 - (0+18)/2 = 2 units
(c)
Expected shortage per cycle (ESC) = E(max(0,DLT - ROP))
Expected shortage per cycle = 1.6 units
Expected shortage per year = (500/50) x 1.6 = 16 units
(d)
Satisfied demand per year = 500 - 16 = 484 units
Satisfied demand per cycle = 484/(500/50) = 48.4 units
(e)
Proportion of customer demand to be backordered = ESC/Q = 1.6/50 = 3.2%
Fill rate = 100% - 3.2% = 96.8%
What are these SLLoss and SLFill? Please define/ state without using abbreviations.
DLT 0 2 4 6 8 10 12 14 16 18 ESC P = Probability 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 M = max(0,DLT - ROP) 0 0 0 0 0 0 1 3 5 7 P x M 0 0 0 0 0 0 0.1 0.3 0.5 0.7 1.6Related Questions
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