How many parts should arrive on february 15

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Reference no: EM131255573

Office Supply Company:-

Office Supply Company (OSC) has a spare parts warehouse in Alaska to support its office equipment maintenance needs. Once every six months, a major replenishment shipment is received. If the inventory of any given part runs out before the next replenishment, then emergency air shipments are used to resupply the part as needed. Orders are placed on January IS and June 1 5, and orders are received on February IS and July 1 5, respectively.

OSC must determine replenishment quantities for its spare parts. As an example, historical data show that total demand for part l AA-66 over a six-month interval is Poisson with mean 6.5. The cost of inventorying the unneeded part for six months is $5 (which includes both physical and financial holding costs and is charged based on inventory at the end of the six-month period).

The variable production cost for I AA-66 is $37 per part. The cost of a regular, semiannual shipment is $32 per part, and the cost of an emergency shipment is $50 per part.

It is January 15 and there are currently three 1 AA-66 parts in inventory. How many parts should arrive on February 15?

Reference no: EM131255573

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