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Unformatted text preview: σ=√2*4= 5.6568 z=1.65 R=8+(1.65*5.6568) R=17.33=18 units b) P=√(2*S/iCD) P=√(2*15/(.30)(25)(48) P=.2887 years P=3.5 months T=m’+z*σ’ m’= (48/(12/5.5))=22.02 z=1.65 σ=√(2+3.5)*4=9.38 T=22.02+1.65*9.38 T=38 units c) The pros of using the P system are schedule replenishment and less record keeping. The cons of using the P system are that the P system requires a larger safety stock. This is more expensive. The Q system is a better inventory system for keeping track of more expensive items....
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- Spring '09
- Management, Annual holding cost=, Tim O'Brien MGT, Order frequency= D/Q, Annual Ordering Cost=