What is the expected shortage cost per reorder cycle

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Reference no: EM132304710

Demand during lead time for Apex Enterprises is distributed as follows:

Probability .05 .10 .2 .3 .15 .15 . 05

Demand 40 41 42 43 44 45 46

a. Use a spreadsheet program to evaluate the expected number of units short per reorder cycle for reorder points of 40 to 46. What is the expected shortage cost per reorder cycle when the reorder point is 40 and cost per unit short is $36?

b. What happens to the expected shortage cost (when R 1⁄4 40 and C 1⁄4 $36) if the demand distribution shifts as follows?

Probability .2 .4 .2 .1 .1 0 0

Demand 40 41 42 43 44 45 46

Reference no: EM132304710

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