Ross whitersquos machine shop uses 2500 brackets during the, Ask an Expert

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Ross White’s machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or 10% of the unit cost) and the ordering cost per order is $18.75. There are 250 working days per year.

After analyzing the costs of various options for obtaining brackets, Ross White recognizes that although he knows that lead time is 2 days and demand per day averages 10 units, the demand during the lead time often varies. Ross has kept very careful records and has determined lead time demand is normally distributed with a standard deviation of 1.5 units.

(a) What Z value would be appropriate for a 98% service level?

(b) What safety stock should Ross maintain if he wants a 98% service level?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91413296

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