A product with an annual demand of 800 units has Co = $20.00 and Ch = $6. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with µ = 26 and σ = 6. =A product with an annual demand of 800 units has Coprobability distribution with μ = 26 and σ = 6.Note: Use Appendix B to identify the areas for the standard normal distribution.a. What is the recommended order quantity? Round your answer to the nearest whole number.Q*:=b. What are the reorder point and safety stock if the firm desires at most a 4% probability of stock-out on any given order cycle? If required, round your answers to thenearest whole number.Record point=$20.00 and Ch = $6. The demand exhibits some variability such that the lead-time demand follows a normalSafety stock =c. If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? If required, round your answer to four decimal places. Roundz value to two decimals.P(Stock-out/cycle) ==How many times would you expect a stock-out during the year if this reorder point were used? Round your answer to the nearest whole number.Number of Stock-outs/year =

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Practical Management Science

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ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

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A product with an annual demand of 800 units has C_o = $20.00 and C_h = $6. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with µ = 26 and σ = 6.

=
A product with an annual demand of 800 units has Co
probability distribution with μ = 26 and σ = 6.
Note: Use Appendix B to identify the areas for the standard normal distribution.
a. What is the recommended order quantity? Round your answer to the nearest whole number.
Q*:
=
b. What are the reorder point and safety stock if the firm desires at most a 4% probability of stock-out on any given order cycle? If required, round your answers to the
nearest whole number.
Record point
=
$20.00 and Ch = $6. The demand exhibits some variability such that the lead-time demand follows a normal
Safety stock =
c. If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? If required, round your answer to four decimal places. Round
z value to two decimals.
P(Stock-out/cycle) =
=
How many times would you expect a stock-out during the year if this reorder point were used? Round your answer to the nearest whole number.
Number of Stock-outs/year =

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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