4QA3 F12 Week 8 Lecture Notes

Fixed costs of replenishment are 15 per order

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Unformatted text preview: tes that unailled demands cost about $10 each in bookkeeping and loss- of- goodwill costs. Fixed costs of replenishment are $15 per order, and holding costs are based on a 30 percent annual rate of interest. a)  What are the optimal lot sizes and reorder points for this brand of paint? b)  What is the optimal safety stock for this paint? 4QA3 F12 A. Gandomi 15 ●  In many circumstances, the penalty cost, p, is difSicult to estimate. For this reason, it is a common business practice to set inventory levels to meet a speciSied service objective. ●  The two common service objectives are: o  Probability of not stocking out in the lead time. α may be referred to as lead time service. o  Proportion of demands that are met from stock. β may be referred to as the 6ill rate. 4QA3 F12 A. Gandomi 16 Order Cycle 1 2 3 4 5 6 7 8 9 10 Demand 180 75 235 140 180 200 150 90 160 40...
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