The average amount of denim used daily by western jeans company is 4000 yards wi
ID: 454576 • Letter: T
Question
The average amount of denim used daily by western jeans company is 4000 yards with standard deviation of 500 yards (normally distributed). The lead time required to receive an order from the textile mill is 3 days. To simplify the ordering system, western jeans places an order every week on Mondays (5 working days). Western jeans wants to limit he probability of stock out and work stoppage to 1 percent. For this Monday when an order was placed western jeans had 3000 yards left in inventory.What model is appropriate? A. EOQ B. EPQ C. Q,R model with random demand D. Periodic review model
How many yards should western jeans order at this time? A. 32,295 B. 31,326 C. 31,904 D. 30,295
What is he safety stock? A. 1,295 yards B. 2,904 C. 2,326 D. 3,295
If at the time western jeans decided to order 32000 yards what was the safety stock? A. 3000 yards B. 4000 C. 5000 D. 6000
For the previous problem, what is the service level? A. 99.77% B. 97.32% C. 98.30% D. 96.71% The average amount of denim used daily by western jeans company is 4000 yards with standard deviation of 500 yards (normally distributed). The lead time required to receive an order from the textile mill is 3 days. To simplify the ordering system, western jeans places an order every week on Mondays (5 working days). Western jeans wants to limit he probability of stock out and work stoppage to 1 percent. For this Monday when an order was placed western jeans had 3000 yards left in inventory.
What model is appropriate? A. EOQ B. EPQ C. Q,R model with random demand D. Periodic review model
How many yards should western jeans order at this time? A. 32,295 B. 31,326 C. 31,904 D. 30,295
What is he safety stock? A. 1,295 yards B. 2,904 C. 2,326 D. 3,295
If at the time western jeans decided to order 32000 yards what was the safety stock? A. 3000 yards B. 4000 C. 5000 D. 6000
For the previous problem, what is the service level? A. 99.77% B. 97.32% C. 98.30% D. 96.71%
What model is appropriate? A. EOQ B. EPQ C. Q,R model with random demand D. Periodic review model
How many yards should western jeans order at this time? A. 32,295 B. 31,326 C. 31,904 D. 30,295
What is he safety stock? A. 1,295 yards B. 2,904 C. 2,326 D. 3,295
If at the time western jeans decided to order 32000 yards what was the safety stock? A. 3000 yards B. 4000 C. 5000 D. 6000
For the previous problem, what is the service level? A. 99.77% B. 97.32% C. 98.30% D. 96.71%
Explanation / Answer
As per the given information, the model choice is D. Periodic review model, because the information available is about the average demand and lead time. No data about ordering cost, inventory carrying and or shortages costs, and or profit/loss on account of particular order quantity.
Orders are placed on every Monday for meeting the demand for five days plus lead time demand. Demand for the week (8 days) have an average of 32,000 (4000*8) and standard deviation as 500*Sqrt(8)=1414.214
The value of Z, standard normal at 99% level of service is 2.33, therefore , the required quantity =32,000 + 2.33*1414.214 = 32,000+3295 approx. At present inventory on hand is 3000, therefore order quantity is 32,295.
Level of safety stock is 3,295 as calculated above.
If the order is for 32000, the safety stock level is A. 3000 yards
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