Describe what is the chocolate raw material safety stock, Operation Management

Assignment Help:

Christian runs a small chocolate shop. He manages his chocolate raw material using a periodic review system. Daily demand has a mean of 100 pounds and standard deviation of 10 pounds. The annual holding cost is $10 per pound. He maintains 98% service level (so z = 2). The lead-time to get more chocolate is 10 days and he reviews his raw material inventory monthly(assume 30 days per month).

a. What is the chocolate raw material safety stock Christian needs to hold? What is the expected inventory level for the chocolate raw material?

b. A management consultant has told Christian that, by installing an IT system, the review period could be cut from one month to one week. How much would Christian be willing to pay for this IT system? (Hint: to simplify the problem, you can assume that the price Christian wants to pay is the saving he can achieve from using this IT system for a year.)


Related Discussions:- Describe what is the chocolate raw material safety stock

Illustrate the quality control systems, Illustrate the quality control syst...

Illustrate the quality control systems? Quality Control verses Quality Assurance: Quality control systems comprise sampling, testing and inspection of raw materials, work-in

Structural adjustment - factor affecting productivity, Structural Adjustmen...

Structural Adjustments - Factors Affecting Productivity Improvement Structural adjustment relates to the composition of society, the industries in which people work, fashions

A firm plans to start production of a new small appliance, A firm plans to ...

A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor at $7 each or to produce them in-h

Industrial relations, discuss the importance of a psychological contract

discuss the importance of a psychological contract

Explain efects in the accounts receivable department, Category- 1) Invoi...

Category- 1) Invoice Amount does not agree with check amount 2) Invoice not on record 3) No formal invoice issued 4) Check (payment) not recieved on time 5) Check no

Explain the factors that are driving change in the industry, Prepare a brie...

Prepare a brief analysis of the vacation cruise industry using Porters Five Force Analysis. Briefly discuss the nature and strength of each of the five competitive forces. Identify

Assignable causes of variability for process control, 1 What advantages can...

1 What advantages can statistical process control methods provide?  2 Explain the significance of common and assignable causes of variability for process control.

Explain when it comes to team identity, When it comes to team identity, wha...

When it comes to team identity, what activities would you recommend to strengthen the team identity and, presumably, improve effectiveness of the team?

Explain importance and enforcement of consumer rights, Compare a Utilitaria...

Compare a Utilitarian and a Libertarian view on the importance and enforcement of consumer rights (to choose, to safety, to be informed, to be heard, to redress and to privacy).

Define what would be the percentage increase in productivity, An operation ...

An operation produces 190 units per hour with a scrap rate of 10 percent. If we could eliminate the scrap completely, what would be the percentage increase in productivity per hour

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd