The purchasing manager for a firm is trying to determine what the safety stock should be for a particular product. She has developed the following table, which gives the distribution of demand during the lead-time and the probabilities:
Demand during lead time / probability
40/ 0.2
50/ 0.25
60/ 0.25
70/ 0.2
80/ 0.1
The carrying cost is $5 per unit per year, the ordering cost is $30 per order, and the stockout cost is $40 per unit. The reorder point is 60 units, and 6 orders are placed each year. What level of safety stock should be maintained?
ROP (reroder point)=d (daily demand) x L (order lead time) +SS (safety stock)
I don't know how to solve it.
2007-06-30
09:50:24
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1 answers
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asked by
Anonymous