What is the optimal order size for Target

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Reference no: EM132365779

Questions -

Q1. Target sells 30,000 units of Samsung TV's every month. Each TV cost $350 and Target has a holding cost of 20%. The fixed cost for each order Target places with Samsung is $4,000,

What is the optimal order size for Target?

What is the annual holding cost of the optimal policy?

How many orders per year does Target place?

What is the annual ordering cost?

Q2. Given the below data, calculate the optimal production batch size, the annual set up and the holding costs for the optimal policy. (One excel tab)

Production rate, P	5,000
Annual Demand, D	3,000 units per year
Set up cost S	$1,000
Holding cost, h	24 percent
Unit Cost, C	$250 per unit

Weekly demands for HP printers at a Radio Shack is normally distributed with a mean of 250 and a standard deviation of 80. Inventory is continuously monitored and an order of 1,000 printers is place each time the inventory drops to 950 printers. The replenishment lead-time is three weeks.

1. How much safety inventory does the store carry? What is the CSL?

2. Assume that the supply lead-time from HP is normally distributed with a mean of 3 week and a standard deviation of 2 weeks. How much safety inventory should Radio Shack carry if it wants to provide a CSL of 97 percent?

Note - Each question needs to be reflected in excel and have its own tab.

Reference no: EM132365779

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