Solution-How much safety stock should home supplies

How much safety stock should home supplies

Reference no: EM13916662

The demand for barbecue grills has been fairly large in the past several years, and Home Supplies, Inc., usually orders new barbeque grills five times a year. It is estimated that the ordering cost is $60 per order. The carrying cost is $10 per grill per year. Furthermore, Home Supplies, Inc., has estimated that the stockout cost is $50 per unit. The ROP is 650 units. Although the demand each year is high, it varies considerably. The demand during the lead time is shown in the following table:

DEMAND DURING LEAD TIME	PROBABILITY
600	0.30
650	0.20
700	0.10
750	0.10
800	0.05
850	0.05
900	0.05
950	0.05
1000	0.05
1050	0.03
1100	0.02
Total:	1.00

The lead time is 12 working days. How much safety stock should Home Supplies, Inc., maintain?

Reference no: EM13916662

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How much safety stock should home supplies : The demand for barbecue grills has been fairly large in the past several years, and Home Supplies, Inc., usually orders new barbeque grills five times a year. The lead time is 12 working days. How much safety stock should Home Supplies, Inc., maint..

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How much safety stock should home supplies

Reference no: EM13916662

Reference no: EM13916662

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