What fraction of the demand will not be met immediately

Assignment Help Operation Management

Reference no: EM132144739

You are the owner of ExoticCooking.com, an online retailer of hip, exotic, and hard-to-find spices. Consider your inventory of saffron, generally worth more by weight than gold. You order saffron from an overseas supplier with a shipping lead-time of four weeks and that you order weekly. Your average quarterly demand is normally distributed with a mean of 415 ounces and a standard deviation of 154 ounces. The holding cost per ounce per week is $0.75. You estimate that your back-order penalty cost is $50 per ounce. Assume that there are 4.33 weeks per month.

a. If you wish to minimize inventory holding costs while maintaining 99.25% fill rate, then what should your order up-to level be?

b. If you wish to minimize inventory holding costs while maintaining 99.25% in-stock probability, then what should your order up-to level be?

c. If you wish to minimize inventory holding and backorder penalty costs, then what should your order up-to level be?

d. If you arbitrarily decide an order up-to level of 250, what fraction of the demand will not be met immediately? What is the expected on-hand inventory at the beginning of a period?

Reference no: EM132144739

Questions Cloud

Find the optimal protection level for full-price rooms : Find the optimal protection level (i.e., the number of rooms to be protected for the business travelers) for full-price rooms.

What value have you found relative to the study of quality : Given our study of quality over the past 7 weeks, what value have you found relative to the study of quality?

What will be the average order quantity : Dr. Jack is planning to implement a computer system that will allow daily ordering, seven days per week, What will be the average order quantity?

Relationship between vendor performance and project outcomes : Explain how vendors will be managed during the project. What is the relationship between vendor performance and project outcomes?

What fraction of the demand will not be met immediately : What fraction of the demand will not be met immediately? What is the expected on-hand inventory at the beginning of a period?

The products should be stored to minimize cost and travel : Using excel solver, solve the optimization model and determine where the products should be stored to minimize cost/travel.

Management of procurement performance and value management : How are the management of procurement performance and value management in an organization related?

Determine via present value method which machine : Determine via present value method which machine to tell your boss to purchase.

Build better working environment : how collaboration between both CFO and CHRO can lead to more ethical approaches in recruiting, developing, and help build a better working environment.

User Account

All Pages