Company uses certain chemical in its finishing process

Assignment Help Operation Management

Reference no: EM132241444

A textile manufacturing company uses a certain chemical in its finishing process at an annual rate of 12,000 liters. This demand ratio is constant over time, but varies randomly in each period. The demand during the delivery time is normally estimated distributed are average of 300lt and standard deviation of 40lt. The chemical is purchased at a cost of acquisition of $ 3.60 / lt and a fixed cost of $ 70 for each time it is ordered. The company uses a annual inventory carrying rate of 20%. The resulting shortage in each period implies reprogramming of production, with a resulting cost proportional to the size of the shortage of $ 1.50 / lt.

a. Get the optimal order quantity and reorder point. ______________, _____________

b. What will be the reorder point if you want the probability of a missing occurrence to be 5%? _______________________

c. Calculate the reorder point if you wish to comply with 99.5% of the demand. ______________

Reference no: EM132241444

Questions Cloud

Organizations better utilize and manage selection activities : What other strategies might help organizations better utilize and manage selection activities?

Determine the optimal policy of the number of pieces : Determine the optimal policy of the number of pieces at the beginning of each week.

Proactively improving employee selection process : Managers are proactively improving the employee selection process with various strategies that will ideally enhance corporate success

Firm new compensation and benefits system : You have been asked to replace the project manager who was heading up your firm’s new compensation and benefits system.

Company uses certain chemical in its finishing process : A textile manufacturing company uses a certain chemical in its finishing process at an annual rate of 12,000 liters.

North american free trade agreement : Briefly explain why organized labor was opposed to the North American Free Trade Agreement (NAFTA).

What are two or more ethical complexities : What are two or more ethical complexities you can identify when working with another country?

Five processing station in production system : Little Law: There are FIVE processesing station in a prodcution system: P1, P2, P3, P4 and P5.

Produce certain part for one of production plant : Little Law: A job shop recently signed a contract with a manufacturer to produce a certain part for one of its production plant.

User Account

All Pages