The average amourt cf denim usec daily by western jeans company is 4000 yards wi

Question

The average amourt cf denim usec 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

Explanation / Answer

Correct answer:

a.

Correct answer:

D. Periodic review model

Explanation:

It is most suitable in the given scenario as order is given on a fixed interval with varying quantity.

b.

Correct Answer:

Working note:

L = 5 working days + 3 days of lead time = 8 days

Z = 2.33 at 1% level

Reorder quantity = daily demand*L + Z*SD*L^.5 - balance inventory

Reorder quantity = 4000*8 +2.33*500*8^.5 – 3000 = 32295.12 or 32295 yards

c.

Correct Answer:

D. 3295

Working note:

Safety stock = Z*SD*L^.5 = 2.33*500*8^.5 = 3295.12 or 3295 yards

d.

A. 3000 yards

Safety stock = weekly demand + lead time demand + balance inventory - reorder quantity

Safety stock = 4000*5 + 4000*3 + 3000 - 32000 = 3000 yards

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.