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

Road Transport, After working for 30 years, Ramjee Somjee Dutt opted for VR...

After working for 30 years, Ramjee Somjee Dutt opted for VRS and started a courier company and did very well in the first four years. He was now looking for expansion of his busine

Explain do you consider them effective, Using the IT Savvy four types of th...

Using the IT Savvy four types of the CIO (page 146 IT Savvy), choose a type for each of CIO or IT leaders for all of the cases we have reviewed in this class. Give example of why y

Define importance of training and education, Define importance of Training ...

Define importance of Training and Education. Importance of Training and Education: Training and education bring employees to a standard whether they can carry out industrial

Explain organization culture importance to business success, Describe organ...

Describe organization culture. Provide a definition and explanation of its importance to business success?

Explain what type of culture is desired, What type of culture is desired by...

What type of culture is desired by Mr. Good¬ night to meet his goals? Discuss.

Explain crises are a regular part of organizational life, How do you think ...

How do you think planning in today's organizations compares to planning 25 years ago? Do you think planning becomes more important or less important in a world where everything is

Explain horizon to develop a forecast against, Why is forecasting important...

Why is forecasting important in organizations, especially as related to understanding the relevant time horizon to develop a forecast against? What are some examples from industry?

Define the temporal flexibility workforce, Define the temporal flexibility ...

Define the temporal flexibility workforce. Temporal flexibility can be accomplished by varying the hours worked through employees within response to changes into demand for

Define evaluation of the merits or reliability of the source, Share a sourc...

Share a source you are planning to use in writing your Resource Scheduling Methods Analysis Paper. Provide an APA citation for the source. Provide a brief summary of the source, an

Explain formulate a marketing mix plan, Formulate a marketing mix plan for ...

Formulate a marketing mix plan for a travel agency by constructing a minimum of three marketing objectives and goals for each of the marketing mix components, product, price, distr

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