1.PRACTICE It takes the company 3 days to deliver cheese to the pizza shop.The a
ID: 340428 • Letter: 1
Question
1.PRACTICE
It takes the company 3 days to deliver cheese to the pizza shop.The amount of cheese used by the company over a period of 7 days are as follows:
1. 100
2. 150
3. 175
4. 180
5. 155
6. 165
7. 170
The manager wants all his confidence interval to be 95% for all forecasting.
The variance of the daily cheese usage is 730.95.
QUESTION:
1. What is the safety stock quantity?
2. At what inventory quantity must the manager re-order cheese?
3. in order to ensure sales for 7 days, at what quantity should the manager re-order?
2. New question
It company sells book; it buys the book at wholesale price of 10 Baht per copy. The company sells the book for 15 Baht flat price for all kinds of books. Last year, the company made 4,000 Baht per week in sales revenue.There are 52 weeks in an operating year. The annual carrying cost if 3 Baht per book. The company only sells its books online. The processing cost of each order is equal to 5% of the sales price per unit.
What is the EOQ amount?
Explanation / Answer
1.
d = average daily demand = (100+150+175+180+155+165+170)/7 = 156.4
s = std. deviation of daily demand = sqrt(730.95) = 27.04
Z = NORMSINV(0.95) = 1.645
L = average lead time = 3 days
Safety Stock = Z*s*sqrt(L) = 1.645*27.04*sqrt(3) = 77
Re-order point = d*L + safety stock = 156.4*3 + 77 = 546
Re-order quantity = 7*156.4 + 1.645*27.04*sqrt(7) = 1212
2.
Weekly revenue = 4,000 Baht
Weekly demand = Weekly revenue/selling price = 4000/15
Annual demand (D) = Weekly demand x 52 = 4000*52/15 = 13867
Ordering cost (S) = 5% of 15 Baht = 0.75 Baht
Annual carrying cost per book = 3 Baht
EOQ = (2.D.S/H)1/2 = SQRT(2*13867*0.75/3) = 83 books
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.