Chao Han is the head of the procurement and inventory management unit at a successful tea producer in China. On average, their annual demand for a particular Pu'er tea (Sheng) is 10,000 kg. One of the origins of this tea is Hekai Mountain. Purchasing price of the raw tea is $400 per kilo. Annual holding cost is 30% of purchasing value, and ordering cost per kilo is $30. In case of stockout, customers would wait. However, on average, the cost of backorder per kilo is $25. What is average backorder that Chao faces? O 53.23 kg O 26.61 kg O 70.71 kg O 35.35 kg
Chao Han is the head of the procurement and inventory management unit at a successful tea producer in China. On average, their annual demand for a particular Pu'er tea (Sheng) is 10,000 kg. One of the origins of this tea is Hekai Mountain. Purchasing price of the raw tea is $400 per kilo. Annual holding cost is 30% of purchasing value, and ordering cost per kilo is $30. In case of stockout, customers would wait. However, on average, the cost of backorder per kilo is $25. What is average backorder that Chao faces? O 53.23 kg O 26.61 kg O 70.71 kg O 35.35 kg
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
Related questions
Question
Pls answer in simple steps, let me know if you need any more details
![Chao Han is the head of the procurement and inventory management unit at a successful tea
producer in China. On average, their annual demand for a particular Pu'er tea (Sheng) is 10,000 kg.
One of the origins of this tea is Hekai Mountain. Purchasing price of the raw tea is $400 per kilo.
Annual holding cost is 30% of purchasing value, and ordering cost per kilo is $30. In case of
stockout, customers would wait. However, on average, the cost of backorder per kilo is $25. What
is average backorder that Chao faces?
O 53.23 kg
O 26.61 kg
O 70.71 kg
35.35 kg](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffbb44b2c-e9b2-4f8d-b500-a6e2b4a9930c%2Fd7d1f83b-da88-4bc2-971b-bc9d1fd48216%2Fdta7ly_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Chao Han is the head of the procurement and inventory management unit at a successful tea
producer in China. On average, their annual demand for a particular Pu'er tea (Sheng) is 10,000 kg.
One of the origins of this tea is Hekai Mountain. Purchasing price of the raw tea is $400 per kilo.
Annual holding cost is 30% of purchasing value, and ordering cost per kilo is $30. In case of
stockout, customers would wait. However, on average, the cost of backorder per kilo is $25. What
is average backorder that Chao faces?
O 53.23 kg
O 26.61 kg
O 70.71 kg
35.35 kg
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Purchasing and Supply Chain Management](https://www.bartleby.com/isbn_cover_images/9781285869681/9781285869681_smallCoverImage.gif)
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
![Purchasing and Supply Chain Management](https://www.bartleby.com/isbn_cover_images/9781285869681/9781285869681_smallCoverImage.gif)
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning