Describe what is the chocolate raw material safety stock, Operation Management

Assignment Help:

Christian runs a small chocolate shop. He manages his chocolate raw material using a periodic review system. Daily demand has a mean of 100 pounds and standard deviation of 10 pounds. The annual holding cost is $10 per pound. He maintains 98% service level (so z = 2). The lead-time to get more chocolate is 10 days and he reviews his raw material inventory monthly(assume 30 days per month).

a. What is the chocolate raw material safety stock Christian needs to hold? What is the expected inventory level for the chocolate raw material?

b. A management consultant has told Christian that, by installing an IT system, the review period could be cut from one month to one week. How much would Christian be willing to pay for this IT system? (Hint: to simplify the problem, you can assume that the price Christian wants to pay is the saving he can achieve from using this IT system for a year.)


Related Discussions:- Describe what is the chocolate raw material safety stock

Explain protected group category, To be considered lawful, a voluntary affi...

To be considered lawful, a voluntary affirmative action plan must meet all of the following criteria except: a. it must be permanent b. It must exist to eliminate past imbalances b

Explain waiting for my physical delivery, Can I access the eBook while wait...

Can I access the eBook while waiting for my physical delivery?

Interview Questions, What questions can be ask in interview for after gradu...

What questions can be ask in interview for after graduation level by a Computer Engineer?

Explain method would you pursue to minimize channel conflict, D-Magic is a ...

D-Magic is a new company that has developed a revolutionary 3D television. It uses a new technology that provides a much sharper and realistic 3D experience than their competitors.

Explain what monthly penalty is the company incurring, A food processor use...

A food processor uses approximately 29,730 glass jars a month for its fruit juice product. Because of storage limitations, a lot size of 4,000 jars has been used. Monthly holding c

What are the common barriers to team progress, Question 1: W. E. Deming...

Question 1: W. E. Deming is credited with providing the foundation of Japanese Quality and resurgence as an economic power. Deming is the best known quality expert in the worl

Explain travel from the workstations to the main aisle, A portable lunch wa...

A portable lunch wagon is to be located along the main aisle of an industrial plant. The vendor wishes to locate the wagon so that the total walking distance for his customers is m

Explain the characteristics of an effective team, Question 1: Explain h...

Question 1: Explain how a leader can enhance the performance in a team? Question 2: (a) Define ‘A Team' and explain the different stages in ‘Team Development'. (b)

Production and operation management, What do you understand by “line balanc...

What do you understand by “line balancing”? What happens if balance doesn’t exist?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd