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A producer operates on 8 units/day in the assembly line. The OM department assumes that the process has a normal distribution and standard deviation of the line is 3 units/day. The ordering cost is $10 and holding cost/roll/year is $0.30. Lead time is 2 days. (Total work day/year is 250 days) (Show Your Work!)
a) What is the economic order quantity?
b) What is the safety stock level for 97% order-cycle service level?
c) What is the safety stock level for 99% order-cycle service level?
d) What is reorder point for 97% order-cycle service level?
e) Calculate reorder point for 99% order-cycle service level?
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Under the current ordering policy, what is the annual total ordering cost?
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