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Tyler is hoping to get a lot of custom cake and cookie orders in his new bakery for various parties and celebrations. He considers keeping a stock of celebratory helium balloons in his bakery so that he can sell them alongside the cakes and cookies to add more value for his customers. However, he knows that the demand for custom goods as well as the balloons is like to be probabilistic in nature instead of deterministic. He is trying to create a model of how many balloons to order to keep in stock to minimize the costs of inventory in his little bakery. He identifies the following characteristics and needs your help in filling out the table given below the information. • Ordering Cost is $20.00 per order Cost of balloons is $5.00 per balloon • The bakery uses the 20% annual holding cost rate for all inventory The lead time for a new order of helium balloons is 21 days. Data from other bakeries indicate that the demand during the 21-day lead time follows a normal probability distribution with a weekly mean of 25 balloons and a standard deviation of 7 balloons per week.

Tyler is hoping to get a lot of custom cake and cookie orders in his new bakery for various parties and celebrations. He considers keeping a stock of celebratory helium balloons in his bakery so that he can sell them alongside the cakes and cookies to add more value for his customers. However, he knows that the demand for custom goods as well as the balloons is like to be probabilistic in nature instead of deterministic. He is trying to create a model of how many balloons to order to keep in stock to minimize the costs of inventory in his little bakery. He identifies the following characteristics and needs your help in filling out the table given below the information. • Ordering Cost is $20.00 per order Cost of balloons is $5.00 per balloon • The bakery uses the 20% annual holding cost rate for all inventory The lead time for a new order of helium balloons is 21 days. Data from other bakeries indicate that the demand during the 21-day lead time follows a normal probability distribution with a weekly mean of 25 balloons and a standard deviation of 7 balloons per week.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter14: Data Mining
Section14.2: Classification Methods
Problem 7P
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Tyler is hoping to get a lot of custom cake and cookie orders in his new bakery for various parties and celebrations. He considers keeping a stock of celebratory helium balloons in his bakery so that he can sell them alongside the cakes and cookies to add more value for his customers. However, he knows that the demand for custom goods as well as the balloons is like to be probabilistic in nature instead of deterministic. He is trying to create a model of how many balloons to order to keep in stock to minimize the costs of inventory in his little bakery. He identifies the following characteristics and needs your help in filling out the table given below the information. Ordering Cost is $20.00 per order Cost of balloons is $5.00 per balloon The bakery uses the 20% annual holding cost rate for all inventory The lead time for a new order of helium balloons is 21 days. Data from other bakeries indicate that the demand during the 21-day lead time follows a normal probability distribution with a weekly mean of 25 balloons and a standard deviation of 7 balloons per week. The number of working days per year is 300 Acceptable probability of a stock-out, for Tyler is 10% or 0.10. 1 Annual Ordering Cost O dollars 2 Total Annual Cost TC dollars 3 Maximum Inventory Level Q*+ S balloons
Transcribed Image Text:Tyler is hoping to get a lot of custom cake and cookie orders in his new bakery for various parties and celebrations. He considers keeping a stock of celebratory helium balloons in his bakery so that he can sell them alongside the cakes and cookies to add more value for his customers. However, he knows that the demand for custom goods as well as the balloons is like to be probabilistic in nature instead of deterministic. He is trying to create a model of how many balloons to order to keep in stock to minimize the costs of inventory in his little bakery. He identifies the following characteristics and needs your help in filling out the table given below the information. Ordering Cost is $20.00 per order Cost of balloons is $5.00 per balloon The bakery uses the 20% annual holding cost rate for all inventory The lead time for a new order of helium balloons is 21 days. Data from other bakeries indicate that the demand during the 21-day lead time follows a normal probability distribution with a weekly mean of 25 balloons and a standard deviation of 7 balloons per week. The number of working days per year is 300 Acceptable probability of a stock-out, for Tyler is 10% or 0.10. 1 Annual Ordering Cost O dollars 2 Total Annual Cost TC dollars 3 Maximum Inventory Level Q*+ S balloons
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