Analyzing costs of various options for obtaining brackets

Assignment Help Operation Management

Reference no: EM13843493

Ross White’s machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or 10% of the unit cost) and the ordering cost per order is $18.75. There are 250 working days per year.

After analyzing the costs of various options for obtaining brackets, Ross White recognizes that although he knows that lead time is 2 days and demand per day averages 10 units, the demand during the lead time often varies. Ross has kept very careful records and has determined lead time demand is normally distributed with a standard deviation of 1.5 units.

(a) What Z value would be appropriate for a 98% service level?

(b) What safety stock should Ross maintain if he wants a 98% service level?

Reference no: EM13843493

Questions Cloud

Top of the parabolic path : If ? = 360o and d = 0.900m, what launch angle θ0 is required for the drop to be at the top of the parabolic path when it reaches the insect?

Hypothetical group and development through four phases : Your assignment is to write a story about a hypothetical group and its development through the four phases. As an option, you can use a personal experience from your own life. Write a brief definition of each phase of group development and describe h..

What is criminologist enterprise : What is criminological enterprise, not just the broad defination but the specifics of what it is

Copying competitors successful competitive decisions : Some companies operate without developing strategies by copying competitors' successful competitive decisions. Others insist on creating a clear strategy. The challenge of developing a clear, sustainable strategy depends on a reliable process, resear..

Analyzing costs of various options for obtaining brackets : Ross White’s machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. After analyzi..

What is the proper format for a research paper : What is the proper format for a research paper outline using Turabian style?

How much will total cost increase : Fixed cost is $30,000, and variable cost is $2 per unit for 10,000 units. If fixed costs increase by 10%, how much will total cost increase?

The major barriers to implanting lean system : Copper Kettle Catering is a full service catering company that provides services ranging from box lunches for picnics or luncheon meetings to large wedding, dinner, or office parties. Are the operations of Copper Kettle Catering conductive to the app..

What is the optimal number of orders per year : Leaky Pipe, a local retailer of plumbing supplies, faces demand for one of Its SKUs at a constant rate of 30,000 Units per year. It costs Leaky Pipe $10 to process an order to replenish stock and $1 per unit per year to carry the item in stock. What ..

User Account

All Pages