Sundance office mfrg som uses a certain type of, Ask an Expert

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Sundance Office Mfrg (SOM) uses a certain type of ergonomically adjusted chair support for its manufacturing operations. Sundance purchases these components from a supplier in Mexico at a cost of $30 per unit. The annual holding cost rate is 25%, annual average demand is 93,000 units and the order cost is $200 per order. The lead time is 6 days. Because demand is probabilistic (standard deviation of annual demand is 38.2 chair supports), SOM has decided to establish a protection level of 94% of not having shortages. The plant is open 300 days per year.

a. What is the safety stock?

b. What is the reorder point?

c. What is the size of the order, Q ?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93127401

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