Question for the data given in problema design a p system, Ask an Expert

Management Studies

Question: For the data given in problem:

a. Design a P system for this phone with a 92 percent service level.

b. Compare the inventory investments required for the P and Q systems (from problem 8) for various values of service level.

c. Why does the P system require a higher inventory investment?

Problem: An electronics retailer carries a particular cellular telephone with the following characteristics: Average monthly sales = 120 units

Ordering cost = $25 per order

Carrying cost = 35 percent per year

Item cost = $300 per unit

Lead time = 4 days

Standard deviation of daily demand = .2 unit

Working days per year = 250

a. Determine the EOQ.

b. Calculate the reorder point for a 92 percent service level, assuming normally distributed demand.

c. Design a Q system for this item.

d. What happens to the reorder point when the lead time changes? What happens to the reorder point when the standard deviation of demand changes?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92750482

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