Meem 6015 hw3 solution - MEEM6015: Supply Chain Management...

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MEEM6015: Supply Chain Management HW 3: Inventory Control and Management Question 1 ( 40%) Choose either product A or product B to show the detailed computation of the numbers in the Table entitled “Inventory Levels” in the risk pooling example. For both products, an order from the factory costs $60 per order and holding inventory costs are $0 . 27 per unit per week. Once an order is placed, the lead time is fixed and equal to 1 week. Suppose that the service level of 97 percent is desired. All the data above are assumed to be equalized in the decentralized distribution system and the centralized one. In what follows, the answer is given to the case of product A in Massachusetts. Average weekly demand is AV G = 33 + 45 + 37 + 38 + 55 + 30 + 18 + 58 8 39 . 3 . Standard deviation is STD = " 1 8 8 X i =1 ( x i - AV G ) 2 # 1 2 13 . 2 , (1) 1
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where x i is the demand of the i th week. Safety stock is
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Meem 6015 hw3 solution - MEEM6015: Supply Chain Management...

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