Practical Operations Management
2nd Edition
ISBN: 9781939297136
Author: Simpson
Publisher: HERCHER PUBLISHING,INCORPORATED
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Chapter 10, Problem 13P
Summary Introduction
Interpretation:
Reorder point for SKU.
Concept Introduction: The reorder point is the minimum level of inventory or stock which indicates a firm to restock its inventory. It is an indicator for a firm to restore its stock. Stock keeping unit is the service or product identification code which is a machine-readable bar code. It helps the company to track the product. It will protect the company from stock out. Thus, inventory can be refilled at the current time.
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Lead time for some SKU is always 10 days, and demand for that SKU is always 50 per day. What isthe reorder point for this SKU?
Reorder Point Ordering: Average demand per day () is 25 units, with a std. dev. of (od) 15 units. Lead
time (LT) is 49 days. Find demand during lead time (DDL), safety stock (SS) and reorder point (ROP
) for 4-sigma (z = 4).
DDL= 500 units, SS = 1225 units, ROP = 1645 units
DDL= 1,645 units, SS=420 units, ROP =
1225 units
DDL= 1,225 units, SS = 420 units, ROP = 1645 units
DDL= 0 units, SS = 1225 units, ROP = 420 units
DDL= 420 units, SS = 1645 units, ROP = 420 units
Reorder Point Ordering: Average daily demand ( d) is 5 units with a std. dev. (od) of 1 unit. Average
lead time ( LT) is 24 days with a std. dev. (OLT) of 1 day. The inventory manager wants to operate
within 3 std. deviations (z = 3). Find the reorder point (ROP) and safety stock (S).
ROP=141, SS=120
ROP=141, SS=21
ROP=120, SS=21
ROP=21, SS=141
Chapter 10 Solutions
Practical Operations Management
Ch. 10 - Prob. 1DQCh. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4P
Ch. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Prob. 17PCh. 10 - Prob. 18PCh. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - Prob. 23PCh. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Prob. 26PCh. 10 - Prob. 27PCh. 10 - Prob. 28PCh. 10 - Prob. 29PCh. 10 - Prob. 30PCh. 10 - Prob. 31PCh. 10 - Prob. 2.1QCh. 10 - Prob. 2.2QCh. 10 - Prob. 2.3QCh. 10 - Prob. 2.4QCh. 10 - Prob. 3.1QCh. 10 - Prob. 3.2QCh. 10 - Prob. 3.3QCh. 10 - Prob. 3.4Q
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- Annual demand (D) is 3,650 units (constant). Lead time (LT) is 10 days (constant). Find reorder point (ROP). Group of answer choices 365 units 36,500 units 0 units Cannot be determined 100 unitsarrow_forwardThe EOQ for an item is 800 units, and the annual usage is 2300 units. What is theperiod order quantity?arrow_forwardHospital XYZ has a monthly demand of 80 bottles of Molnupiravir 200mg capsule. The lead time for orders is 7 days, and the hospital maintains a safety stock of 76 bottles and a maximum stock level of 156 bottles. Currently, the hospital has a remaining balance of 90 bottles. Is the item below or above its reorder point? How many units should the company purchase?arrow_forward
- Xemex has collected the following inventory data for the six items that it stocks: ITEM CODE UNIT COST ($) ANNUAL DEMAND (UNITS) ORDERING COST ($) CARRYING COST AS A PERCENTAGE OF UNIT COST 1 10.60 600 40 20 2 11.00 450 30 25 3 2.25 500 50 15 4 150.00 560 40 15 5 4.00 540 35 16 6 4.10 490 40 17 Lynn Robinson, Xemex’s inventory manager, does not feel that all of the items can be controlled. What ordered quantities do you recommend for which inventory product(s)?arrow_forwardSKU One is sold at retail store for $8 per unit. SKU One has a weekly demand of 975 units with an average lead time of 5 weeks and a standard deviation of lead time of 2 weeks. Based on the information and a 95% service level, what is the reorder point for SKU One? please show work how to solvearrow_forwardWhen demand is not constant, the reorder point is a function of what four parameters?arrow_forward
- What are the primary trade-offs captured in the Economic Order Quantity (EOQ) Model? Inventory Cost Variable Cost of Units Revenue Fixed Cost When Placing Ordersarrow_forwardFor fixed order quantity inventory system, which of the following costs is increased when order size (Q) is increased? a) Setup cost b) Ordering cost c) Start-up quality cost d) Insurance cost e) Receiving inspection costarrow_forwardReorder Point Ordering: Average lead time (??⎯⎯⎯⎯⎯⎯⎯⎯)(LT¯) is 20 days, with a std. dev. (???)(σLT) of 6 days. Daily demand (?)(d) is 50 units (constant). Find safety stock (??)(SS) and reorder point (???)(ROP) for ?=2z=2. Group of answer choices SS=80.5 units, ROP=1080.5 units SS=53.7 units, ROP = 1053.7 units SS=900 units, ROP=1,900 units SS=600 units, ROP = 1,000 units SS=600 units, ROP=1,600 unitsarrow_forward
- The purpose of computing for EOQ is to put into balance the Carrying Cost and Ordering Cost. Is it True or False?arrow_forwardCape Fear Hospital consumed 400 boxes of bandages per week last year. The price of bandages was $80 per box, and the hospital operates 52 weeks per year. The cost of processing an order was $64, and the cost of holding one box throughout a full year was 20% of the value of the material. What is the EOQ? 407 boxes 102 boxes O 408 boxes O 57 boxesarrow_forwardWilliam Beville's computer training school, in Richmond, stocks workbooks with the following characteristics: a) The EOQ for the workbooks is (round your response to the nearest whole number). b) What are the annual holding costs for the workbooks? $ (round your response to the nearest whole number). c) What are the annual ordering costs? $, (round your response to the nearest whole number). William Beville's computer training school, in Richmond, stocks workbooks with the following characteristics: Demand D Ordering cost S Holding cost H 20,000 units/year $26/order $4/unit/year a) The EOQ for the workbooks is (round your response to the nearest whole number). b) What are the annual holding costs for the workbooks? $☐ (round your response to the nearest whole number). c) What are the annual ordering costs? $ (round your response to the nearest whole number).arrow_forward
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