1bROP as PDF - HOMEWORK 1. The lead time demand for...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
HOMEWORK 1. The lead time demand for microwave ovens is found to have the following probability distribution: Demand Probability 7 0.03 8 0.07 9 0.10 10 0.70 11 0.06 12 0.04 a. What should be the R.O.P. so that the probability of a stock out is 5%. b. If the R.O.P. is set at 10 what is the probability of a stock out? c. For a 95% service level, what should the R.O.P. be? What is the safety stock? d. If the service level is changed to 85%, what is the reorder point?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
SOLUTION Demand Probability P(Dem > D) 7 0.03 0.97 8 0.07 0.90 9 0.10 0.80 10 0.70 0.10 11 0.06 0.04 12 0.04 0.00 a. If P(Stk Out = 0.05), then the ROP should be 11, since at ROP of 11, the P(Stk Out) = 0.04 which is better than 0.05. b. If the ROP is set at 10, the P(Stk Out) = 0.10 c. If the desired service level is is 95%, then the P(Stk Out) = 1 - 0.95 = 0.05 And for P(Stk Out) = 0.05, the ROP must be set at 11. Safety Stock = ROP - (Expected Demand during lead time) And the Expected Demand during lead time = (7)(0.03) + (8)(0.07) + (9)(0.10)
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

1bROP as PDF - HOMEWORK 1. The lead time demand for...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online